Newb Intro

[turbo89]

Hi,

I've been lurking on this forum for a while and thought I'd finally join. I'm a 29 yr old, hoping for an early retirement of ~ 50. In reality I like my job, so I'm not sure I'll actually retire (I know, I know, thing's change when you get older).

Here's a quick summary of my savings/plan:

401k accounts: $115k
Taxable Accounts: $24k
Home Equity: ~$70-80k
Annual 401k contributions: $15.5k (includes employer match)
Taxable Annual Savings: $13k.

I'm working to build up some more savings, and pay off my student loan debt (only 1 loan left!). After that's paid off I'll focus on stashing the additional cash away in taxable / non-taxable accounts.

I'm starting to change my investment strategy from being focused on equity growth, to focusing more on good dividend paying stocks.

 

[MichaelB]

Looks like you're doing very well Turbo89. Keep that up and you'll have no problem FIRE'ing at 50. Good luck and welcome to the forum.

 

[pb4uski]

Welcome. You're off to a great start. Slow and steady wins the race. Quicken Lifetime Planner or Firecalc might be useful to you to see whether your planned rate of saving and investing will allow you to meet your goal of retiring ~50.

 

[Rothman]

You've done well turbo89 in choices so far but I'd reconsider your dividend paying stock strategy. Do some reading on total return. In taxable accounts dividends lead to taxes, you are better off with capital gains as your salary grows and in retirement accounts I'd be low cost total market like VTI with 100% given your long time horizon. Some people in retirement started on dividend paying to replace bonds since yields have dropped so much but these equities are very low growth, not my favorite with a 20-30 year time horizon.


Sent from my iPad using Early Retirement Forum

 

[Katiek]

Welcome and you're off to a great start, especially if you're paying off student loans while saving. As for whether or not you'd really want to RE, just having the financial independence so that you don't have to worry as much about potential changes in the workplace makes work more enjoyable.

So make financial independence your goal, and as you get closer you'll have a much better idea what you actually want to do, but it will be nice to have choices.

 

[turbo89]

Thanks for the feedback guys and gals!

To address some of the comments - I've used Firecalc, some fidelity tools, custom excel spreadsheet(s) (which I always fall back on), and various other tools.

I'll investigate the vanguard VTI fund a bit more (I currently have a VDIGX position), as I'm a big fan of Vanguard funds. I should have clarified a bit more, that my current 401k position will probably stay with growth stocks, due to the poor options for dividends.

Also - The tax perspective on dividends vs. capital gains seems a bit odd to me? Long term capital gains is the same tax rate as dividends. I highly doubt I'll hold many "growth equities" for more than a few years, so I'll just be shifting capital gains tax from yr-to-yr with growth equities (and in years I sell there's a good chance I'll jump a tax bracket). Please pass along any pertinent links, if you can think of them.

Cheers,
Turbo

 

[38Chevy454]

Good start so far. You might want to put some Roth IRA money instead of paying extra on the student loans, letting that have some more time to compound. Of course depends on the rate for the loans. The more you can save earlier the better the end results for early retirement.

 

[Rothman]

turbo89 the tax benefit in rates comes from timing. Assuming your income is higher now than it will be in your ER to SS period your capital gain rate can be managed low to zero, while if you took as dividends while working is reduced to something like 20% there is a lot of money to be saved.


Sent from my iPad using Early Retirement Forum