Talk To Me About Insurance, Investing, Retirement, etc

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jagec

Lifer
Apr 30, 2004
24,442
6
81
Ahhh, ok that makes sense. I'll have to keep my eyes peeled for a house with some easily realizable equity plus a good price.

That implies a serious breakdown in the real estate market. Houses generally sell for what they're worth. Exceptions to that rule often come with caveats of their own...for example, you can buy a foreclosure or short sale, but the low price is offset by headaches in getting the deal closed and unexpected repairs to the often-neglected house.

Pay off your student loans. Live on <=$20k/yr and save the rest. THEN buy a house.
 

GWestphal

Golden Member
Jul 22, 2009
1,120
0
76
That's my issue, is that over the 3-4 years I'm paying off student loans I'll need someplace to live. Which around here will be at the very least 6k and more likely 8k per year. That's 25k or like 10% of a mortgage.
 

Engineer

Elite Member
Oct 9, 1999
39,234
701
126
Aggressively pay off your debt than worry about investments. The only exception is if your company has a generous match policy on your 401k.

I remember being roasted by many on this forum for paying off my home in 6 years and 8 months (on a 30 year mortgage) instead of putting more money into the stock market. Of course, that all changed when the market took a 60% dive. I like this strategy and it's worked GREAT for me!
 

lykaon78

Golden Member
Sep 5, 2001
1,174
9
81
Buy the cheapest 20 year term life policy to cover 5-10 times your salary so you can take care of that kid you mentioned. I think MetLife has some options that don't require a significant exam (just a telephone interview and some behind the scene data aggregation reports about you). You might pay even less with a company that requires an exam. AIG, Banner Life, Ohio National are some of the cheapest term companies out there. Some of the online term websites will help connect you to the best rate.

Ideally the term would have a conversion privilege to allow you to convert to a permanent plan of insurance. That way if you develop some catastrophic illness in year 19 you can convert your policy for well below your actual risk.
 

Exterous

Super Moderator
Jun 20, 2006
20,431
3,537
126
30K @ 3-3.5% and 70K @ 5-6.8%, one at salliemae, one through the state, and the 70k through directloan/myfedloan

I am not sure what your payments are but I would pay minimum on the 3-3.5%. For the rest - do you have a good 401k? If not then I would put the max into an IRA or Roth IRA (depending on current tax rate vs estimated tax rate on retirement) and the rest towards paying off your higher interest rate loans. With no match there really is no compelling reason to do a 401k over an IRA other than contribution limits and an IRA\Roth gives you significantly more freedom in terms of options. That said - if you do have a good 401k you may have options in your 401k that you wouldn't in an IRA. For example: My wife has access to Fidelity Spartan funds in her 403b without needing to meet the $10k minimums she would need to have on her own.

Investing
+++++++++++++
Best Brokerages?

Depends on your investing type. Picking your own stocks is riskier but often requires different brokerages than mutual or index funds. For index funds there are few differences between Vanguard, Fidelity of Schwab. If you want to lose money (or not gain as much as your could) then go for non-index fund mutual funds. ~75% of non-index mutual funds underperform the market every year. (Some years were as high as 85%)

Should you always rollover 401ks into ira or other accounts as soon as possible to protect your money from being swindled if the company goes under? Also wouldn't rolling over into an account you control the allocation on possibly lead to higher yields and lower fees?

It depends and the chances of being swindled are few for a 401k. 401ks are also protected in bankruptcies (I went through one). I kept a 401k for years at an employer who provided better access to funds then I could have had on my own so it depends on what they offer.

Health Savings Accounts? Sometimes you can invest in mutual funds with them I think???

Generally only worry about those if you have maxed your other tax advantaged spaces first or think\know you will have high health care costs

Investing percent breakdowns? Stocks, bonds, treasuries, mutual funds, annuities, international etc

Opinions vary but generally bond percentage = your age and international = 20-40% of your stock portfolio

What other investing tools should be looked at 529s etc etc?

Are you going to school or paying someone else's schooling? If not look to other tax advantaged spaces first.

Banking
++++++++++++++++++++
Best Banks? Interest on checking and savings?
Should you keep 3 month emergency fund in liquid cash if the interest rates are essentially zero? that's money that isn't working for you.

Interest rates are so low it barely even matters in terms of banking. There are a very few that have higher % interest rates but I'd look for convenience + other features first. Local banks will tend to offer higher interest savings at lower minimums but the larger ones may offer better options liked more ATMs, more safety depostie box availability or reimbursed ATM fees (C. Schwab)

Credit Cards
+++++++++++++++++
I personally have no credit card debt (Yay!), but what are the best cards. If you want to get the most out of credit which cards should you get? Are cards with fees ever worth it? What are perks about cards people sometimes don't realize or not utilize? Which cards to maximize money back, rewards, miles etc?

This is a very loaded question for ATOT. Many will tell you to avoid annual fees, point\mile cards or even credit cards all together. Personally I find that with a bit of work they can be an incredible asset and do actually keep a couple of annual fee cards myself.

That said the first and by far most important thing is to PAY THEM OFF EVERY MONTH. If you carry a balance then any type of reward is meaningless as teh APR more than negates the benefits.

Maximizing miles or points depends on what you want to use them for. There are a myriad of travel cards with benefits for certain types of travel. Depending on your location you may get a different card to get to Europe then you would for Australia. You may get better use out of an IHG card for hotels in England instead of a SPG card for hotels (typically only good for redemption in major cities.)

I keep 2 cards with an annual fee. Chase Sapphire preferred: No foreign transaction fees, transferable points to partners (Hyatt, United etc) trip\baggage insurance, 7% annual dividend and instant human phone answering when you call (addicting) among other benefits.

IHG card: Platinum Status plus 1 free night per year at any property for the $49\year fee - even the $800\night IC in Bora Bora. Even if you don't go to Bora Bora its pretty easy to find a room to use it for if you travel even slightly

If you don't want to travel then there are some cards that do well in certain areas but I don't know much about those as my CC usage is completely travel related.

Social Security Planning ( if it still exists)
+++++++++++++++++++++++++++
Since disbursements rise by 8% per year up to 132%, should you wait until 69 to start withdrawing? Should someone 30 or younger plan on not having social security?

I would wait much later in life to worry about disbursements. It wouldn't surprise me to see more than a few changes which would completely change calculations so there isn't much point right now.

Personally I would (and do) plan on it not being there even though it likely will be. Under current rules SS will almost certainly be able to pay out 75% of promised benefits to people our age and there are a couple of relatively easy changes that could make that go back up to 100%. Still - if you dont plan for it and it is there then its extra play money. Maybe now you can finally go to Bora Bora

If you have any other tips, tricks, points to add to the wealth management, estate planning, insurance tips to help people make/save money, please do so.

I would pay careful attention to retirement health care and Long Term Care Insurance rates. IMO this is a far far bigger concern than SS. Health cares costs are rising and its not cheap for nursing homes or hospice care currently let along getting into the good ones. Medicare and Medicaid are currently on track to be a much bigger burden then SS despite being talked about less. Not much you can do about it now but it should absolutely be something on your radar to learn more about and be prepared for.

Also - I know it sounds silly but my wife and I actually get a weekly allowance. This is money that we use only for non-core expenses like eating lunch out at work, bar tabs, computer parts\games (me), purses\shoes (her) etc. We have found that we are more likely to save for these items then just go out and get them. It also created the sense of 'do I need this enough to forgo that other thing I was saving for?' This lead to a large decrease ind our monthly spending on frivolous items. From a relationship standpoint it was beneficial because it removed the 'Why can't I get X when she bought Y'. Now she can spend all she wants on shoes or purses as long as it comes out of her allowance

Unlikely to be important now but for future estate planning pay attention to options utilizing the IRS 7520 rates. As the current environment shows in a time of very low interest rates these can provide an amazing opportunity to pass on your estate to your dependents\spouse. Basically the taxes due to the government are based on the 7520 rates which are 120 percent of the applicable federal midterm rate. Currently this is 2.2%. What this means is that (typically) any gains beyond 2.2% are passed on tax free to the beneficiaries. Its not too hard to beat 2.2% in an investment. Still I wouldn't worry about the options until after you have maxed out your tax advantaged space or suddenly come upon $250k to invest in a lump sum
 
Last edited:
Nov 7, 2000
16,404
3
81
first, you need some emergency savings

second, you need to be taking advantage of any company 401k match (invest in lowest cost funds offered)

thirdly, max out the 5,500 contribution to a roth ira (invest in low cost index funds).

beyond that, your 70k loan is pretty expensive so I'd divide the rest of my money between paying that down and upping the 401k contribution.

as for trust, they usually cost a couple thousand dollars and frankly you dont have much assets to protect right now. its good to think about for the future though.

as for SS, i think the smart thing to do is pretend like it doesnt exist. it will likely be around in some form, but why leave your future to something you can't control?

life insurance doesnt make much sense unless you have dependents to protect. and then, you should just look at term life policies.
 
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