Fanta Posted July 22, 2014 Report Share Posted July 22, 2014 (edited) http://i.imgur.com/2zJzTA5.jpg This was @ 12% interest for a Roth IRA - guy on left only invested $14,000 over 7 years, guy on the right invests $76,000 over 38 years. To you younger guys, definitely evaluate how you spend your finances. Edited July 22, 2014 by Fanta Link to comment Share on other sites More sharing options...
Walker Posted July 22, 2014 Report Share Posted July 22, 2014 (edited) your graph is widely unrealistic a realistic return for a roth ira is around 7% but assuming such things are still around in 47 years and the country hasn't gone to hell....it may still be worthwhile to invest in a roth ira at the age of 18 but using a realistic % return.....it would take an 18 y/o investing $5500 max contribution a year(every year) till 65 to reach 1.9 million dollars this is a significant retirement and as Fanta suggested likely worth it Edited July 22, 2014 by Walker Link to comment Share on other sites More sharing options...
Fanta Posted July 22, 2014 Author Report Share Posted July 22, 2014 (edited) your graph is widely unrealistic a realistic return for a roth ira is around 7% but assuming such things are still around in 47 years and the country hasn't gone to hell....it may still be worthwhile to invest in a roth ira at the age of 18 but using a realistic % return.....it would take an 18 y/o investing $5500 max contribution a year(every year) till 65 to reach 1.9 million dollars this is a significant retirement and as Fanta suggested likely worth it I think they used the 12% to show the difference better over the long term, but I agree, 7% is more realistic. A good friend of mine in the Miata community uses the money he makes off of the interest on his index funds to pay for his mortgage is another example of investing and using it smartly. I've found http://www.investopedia.com/ very helpful in helping me understand certain aspects ( thanks to chiplee for pointing me in that direction a good while back ). Edited July 22, 2014 by Fanta Link to comment Share on other sites More sharing options...
Walker Posted July 22, 2014 Report Share Posted July 22, 2014 looking back i wish i had invested in an IRA.....it's certainly best to get in early it's not too late for me....but even if i start now i will only have 1/4 of what i would have if i had started 18 years ago still that will help supplement whatever SS is left for people my age by then Link to comment Share on other sites More sharing options...
Fanta Posted July 22, 2014 Author Report Share Posted July 22, 2014 I'm 28 now and just started - mostly because I finally felt financially able, which I feel is a lot of people's reasoning why they don't sooner. Link to comment Share on other sites More sharing options...
Walker Posted July 22, 2014 Report Share Posted July 22, 2014 yeah....there is a great deal of young adults that can't even find work in the country right now.....i've seen figures as high as 18% unemployed 18-28 y/o's ....and another 20% are underemployed ....and a huge % are swimming in student loan debt..... it's not very easy for a young person to max out an IRA every year......but even if they could scrape together 1000 a year it would yield a significant long term investment Link to comment Share on other sites More sharing options...
jszucs Posted July 22, 2014 Report Share Posted July 22, 2014 7% is a crazy number for current times unless you got a huge chunk of change to plop down form the very start. Both %'s above are total pipe dreams in current market and even if market was good turning a % like that would involve more risk then would be long term sustainable at that rate. While I know what your trying to say to the younger group they are both reather unrealistic %'s I'm struggling to keep around a 4-6% return, I know what I'm doing, and Ive got a chunk of change to plop down. Sure things are paing even less much much less. Link to comment Share on other sites More sharing options...
jszucs Posted July 22, 2014 Report Share Posted July 22, 2014 To help those that are invested / going to invest. As you get a raise, put a chunk of that towards investments. IE get a 3% raise add 1% of that rais to your contribution %. You won't miss it and it will be there later in life for you then. Link to comment Share on other sites More sharing options...
Turbo Cary Posted July 22, 2014 Report Share Posted July 22, 2014 I don't invest in retirement because I doubt that the system will be around when I retire Look at the state of our country/world. The economy is held up in petrodollars and when the u.s finally isn't the default oil currency our system will collapse. As for saving 5k a year as young person it is almost impossible. With food prices rising, student loans, high cost health insurances and bills what average person age 25 or younger can put away that kind of money a year? I made 38k last year and still can't afford to put 5 grand a year away. Link to comment Share on other sites More sharing options...
Walker Posted July 22, 2014 Report Share Posted July 22, 2014 7% is a crazy number for current times unless you got a huge chunk of change to plop down form the very start. Both %'s above are total pipe dreams in current market and even if market was good turning a % like that would involve more risk then would be long term sustainable at that rate. While I know what your trying to say to the younger group they are both reather unrealistic %'s I'm struggling to keep around a 4-6% return, I know what I'm doing, and Ive got a chunk of change to plop down. Sure things are paing even less much much less. it depends on what you invest your IRA in.....and while it might be 5% for 4 years while we're in a slump....it could be 9% when things pick up for a great many years....but 7% is the average Link to comment Share on other sites More sharing options...
jszucs Posted July 22, 2014 Report Share Posted July 22, 2014 it depends on what you invest your IRA in.....and while it might be 5% for 4 years while we're in a slump....it could be 9% when things pick up for a great many years....but 7% is the average I work for a bank..... IRA's retail or investment classed are not doing ANYTHING unless you have 100K + to put into them. Link to comment Share on other sites More sharing options...
scott87star Posted July 22, 2014 Report Share Posted July 22, 2014 A good friend of mine in the Miata community uses the money he makes off of the interest on his index funds to pay for his mortgage is another example of investing and using it smartly. Taking money away from an investment making, in your example, 7% and using it to pay an investment only costing you 3% is not necessarily using it smartly. Of course the rate of return on real estate differs widely but you have to consider which investment is giving you a better return. What sounds like financial sense often isn't once you put everything down on paper and look at the cash flows. And yes, I didn't think the financial system would be around when I was old enough to be concerned either, and yet here I am careening towards geezerhood spending a few hours a week managing investments. Thankfully I couldn't pass up the free money company matching 401K money. Link to comment Share on other sites More sharing options...
nomad Posted July 22, 2014 Report Share Posted July 22, 2014 Most people would rather spend $2000 a year on cell phone and cable bills. Link to comment Share on other sites More sharing options...
87redcat Posted July 22, 2014 Report Share Posted July 22, 2014 Matching 401K's from a company is a fantastic way to save. But... only put into the 401 what the company matches. ie they will match up to 6%, only put in 6% to the 401K. Anything else you want to save put in a ROTH IRA. It's taken out after taxes so when you retire there are supposed to be no taxes when you take it out. Compared to a normal IRA, which is pretax dollars from your paycheck and CAN be taxed when taken out. As far as the young guys. Try, try, try to save something. I only started when I was in my late 30's and if I would have saved only 50 a month when I was in mt early 20's I'd have 3 or 4 times as much as I do now. No one ever told me. So I'm telling all you guys who will listen. Link to comment Share on other sites More sharing options...
Edde Posted July 22, 2014 Report Share Posted July 22, 2014 Surely if the best you have access to is a 401k DO take full advantage of it. The matching employer contributions are what it's all about. Sadly though, those were invented to replace defined benefits and/or profit sharing programs. They cost companies less and don't return what the other plans did but if it's what you got, take it. Link to comment Share on other sites More sharing options...
Xtreme Industries Posted July 22, 2014 Report Share Posted July 22, 2014 I am definitely forcing my boys to start saving as soon as they get jobs. even 50-100 a month to start is better than nothing. I don't car how long they have to live with me as long as they are planning for their future and not blowing their money on crap. Link to comment Share on other sites More sharing options...
duckheads Posted July 22, 2014 Report Share Posted July 22, 2014 (edited) Everyone needs to start somewhere and the sooner the better. For the guy makeing 38 or any amount. Start with $100 a month. Dollar cost averaging is your friend. It forces you to buy when the markets are down and up You will be surprised at how it builds. It becomes contagious. At least it did for me. Instead of blowing a couple hundred bucks a weekend at the bars chasing tail i invested a couple hundred bucks a month and blew less money at the bars. Just to clarify this was after I paid off the two credit cards I ran up to the limits! A lesson I will never forget nor will I repeat! You will never get a return anywhere near what you are paying in cc debt. Pay that off first. Edited July 22, 2014 by duckheads Link to comment Share on other sites More sharing options...
jszucs Posted July 23, 2014 Report Share Posted July 23, 2014 (edited) Everyone needs to start somewhere and the sooner the better. For the guy makeing 38 or any amount. Start with $100 a month. Dollar cost averaging is your friend. It forces you to buy when the markets are down and up You will be surprised at how it builds. It becomes contagious. At least it did for me. Instead of blowing a couple hundred bucks a weekend at the bars chasing tail i invested a couple hundred bucks a month and blew less money at the bars. Just to clarify this was after I paid off the two credit cards I ran up to the limits! A lesson I will never forget nor will I repeat! You will never get a return anywhere near what you are paying in cc debt. Pay that off first. I think most have done about the same going out and blowing money when younger not really thinking about. You have to admit you will never have it like that again even if you had though money though. So there is something to be said about the freedom and enjoyment. Until they really regulated down the 401K's and stopped companies allowing to direclty trade into compnay stock in the 401K if yo knew what you were doing, and could make as many unrestricted trades that cost you nothing to trade in the 401K and could trade in and out of company stock and had a volitie but money making compnay stock. It was possible to day trade your 401K and make more then a CC % on return. Best I had ever done was 32 1/2% return but I spend hours a day watching stocks and funds, and day traded everyday which is RISKY. This format also costs the 401K fund 1000's in trade fees which is another reason most funds have totally put a stop to this past even the regulated parts Edited July 23, 2014 by jszucs Link to comment Share on other sites More sharing options...
chiplee Posted July 23, 2014 Report Share Posted July 23, 2014 (edited) I agree that 7 and 12% return in an IRA is unrealistic. Should be more like 15 to 20% because it should be in a Roth structured brokerage IRA and you should be trading individual stocks and high yield REIT's that you research and select by hand yourself. I made $27,000.00 plus dividends this year tax free on a single trade of 100 $aapl shares that I held for less than a year. Get in the game or get left behind fella's . You're too young to be risk averse. And never spend a dime of the money you make trading in a Roth. It's retirement money. Pay your mortgage with income. Edited July 23, 2014 by chiplee Link to comment Share on other sites More sharing options...
MikeMeyerhoff Posted July 24, 2014 Report Share Posted July 24, 2014 You do need to take individual risk to really come out ahead. Anything you aren't in control of is just a form of savings (even if its stock market based) and the whole system is set up to destroy savings. I'm not saying don't save, but understand the different between saving and investing (risk). Here are some different numbers for Ben and Author.... http://www.starquestclub.com/forum/uploads/gallery/album_1144/gallery_2764_1144_25980.gif Link to comment Share on other sites More sharing options...
tsi_tom Posted July 25, 2014 Report Share Posted July 25, 2014 How is one supposed to save when he/she owns a Conquest/Starion? 1 Link to comment Share on other sites More sharing options...
viper1355 Posted July 26, 2014 Report Share Posted July 26, 2014 How is one supposed to save when he/she owns a Conquest/Starion? ...aaaand this guy just won the argument XD. Link to comment Share on other sites More sharing options...
scott87star Posted July 27, 2014 Report Share Posted July 27, 2014 ConocoPhillips has a generous match, where an employee can put in one percent and Conoco will match you nine times that. "They're helping people young in their careers get a huge jumpstart, and then have 40 years potentially to see that money grow and compound," says Collins.Bloomberg reports: ConocoPhillips estimates that an employee could retire at 60 after 35 years of service with savings of $3.8 million, adjusted for inflation, assuming a starting salary of $75,000 and increases of 4 percent a year. Good lord, I picked the wrong industry 30 years ago. Link to comment Share on other sites More sharing options...
chiplee Posted July 28, 2014 Report Share Posted July 28, 2014 Good lord, I picked the wrong industry 30 years ago. No kidding. Most of the major carriers in the airline industry make a 15% contribution to employee 401k's whether the employee contributes or not, and OBTW contribution limits don't apply to company matching funds or contributions. They only apply to the money the individual invests. That means you get to put $17,500 into your 401k, and any company portion is over and above that. It's one of the only reasons I'm slightly bummed about not going to the airlines now that I'm retired from the Marine Corps. My company match is a measly 3.5%. My wife's is like 5%. Link to comment Share on other sites More sharing options...
Edde Posted July 28, 2014 Report Share Posted July 28, 2014 No kidding. Most of the major carriers in the airline industry make a 15% contribution to employee 401k's whether the employee contributes or not, and OBTW contribution limits don't apply to company matching funds or contributions. They only apply to the money the individual invests. That means you get to put $17,500 into your 401k, and any company portion is over and above that. It's one of the only reasons I'm slightly bummed about not going to the airlines now that I'm retired from the Marine Corps. My company match is a measly 3.5%. My wife's is like 5%. Where ARE you going or done gone to then? And that we should ALL be in the oil business Link to comment Share on other sites More sharing options...
Recommended Posts