younginvestor2013
Recycles dryer sheets
- Joined
- Feb 6, 2013
- Messages
- 226
Hello,
I am sure this has been discussed here, but I thought I'd start a new thread anyway.
I am 24 and believe I am on a good track to achieving FI at a relatively young age (40ish~).
I am confident in my investment decisions and allocations. However, I am "uneasy" with my current and future allocations of taxable investments (standard investments - ETFs, stocks, mutual funds, etc) and non-taxable/retirement investments (ROTH 401K and IRA).
Currently, my portfolio is as follows:
Roth 401K/Roth IRA (nontaxable): 12.5%
ETFs (taxable): 84%
Cash: 3.5%
As it stands now, most of my "long term saving/investing" is going into my retirement/nontaxable accounts. I do save here and there into my taxable funds when I have extra money.
As time passes, I believe the allocations of taxable/nontaxable will even out more (unless my salary increases sizably, which I anticipate happening in the long run!).
My concern is that I will eventually have enough money invested (overall) to achieve FI, but may face huge penalties/tax consequences in order to do so (if this is achieved by say 40-45).
For example, imagine if I am 45 and have (in today's dollars) $1,200,000 in taxable investments and $1,200,000 in retirement accounts. One might argue that if one had access to the entire $2,400,000, then I would easily be FI.
But...if I only could access the $1.2m without stiff penalties, I would be reluctant to consider myself FI or "quit the daily grind".
Does anyone have any suggestions?
The quick and dirty answer would be to put more/all of my money into my taxable accounts. But then there is the huge opportunity cost (tax advantages lost) by ignoring my retirement accounts.
I've asked people who are fairly financially savvy, and they always promote the retirement accounts - but usually my conversations with them are fairly modest, as I do not wish to disclose details of my portfolio balance, savings rate, or future plans with friends or acquaintances.
I know that there is the 72t rule. This seems logical for someone who may be in their early to mid 50s. But it does not seem practical for a 20-30 year time span.
Thanks for your input.
I am sure this has been discussed here, but I thought I'd start a new thread anyway.
I am 24 and believe I am on a good track to achieving FI at a relatively young age (40ish~).
I am confident in my investment decisions and allocations. However, I am "uneasy" with my current and future allocations of taxable investments (standard investments - ETFs, stocks, mutual funds, etc) and non-taxable/retirement investments (ROTH 401K and IRA).
Currently, my portfolio is as follows:
Roth 401K/Roth IRA (nontaxable): 12.5%
ETFs (taxable): 84%
Cash: 3.5%
As it stands now, most of my "long term saving/investing" is going into my retirement/nontaxable accounts. I do save here and there into my taxable funds when I have extra money.
As time passes, I believe the allocations of taxable/nontaxable will even out more (unless my salary increases sizably, which I anticipate happening in the long run!).
My concern is that I will eventually have enough money invested (overall) to achieve FI, but may face huge penalties/tax consequences in order to do so (if this is achieved by say 40-45).
For example, imagine if I am 45 and have (in today's dollars) $1,200,000 in taxable investments and $1,200,000 in retirement accounts. One might argue that if one had access to the entire $2,400,000, then I would easily be FI.
But...if I only could access the $1.2m without stiff penalties, I would be reluctant to consider myself FI or "quit the daily grind".
Does anyone have any suggestions?
The quick and dirty answer would be to put more/all of my money into my taxable accounts. But then there is the huge opportunity cost (tax advantages lost) by ignoring my retirement accounts.
I've asked people who are fairly financially savvy, and they always promote the retirement accounts - but usually my conversations with them are fairly modest, as I do not wish to disclose details of my portfolio balance, savings rate, or future plans with friends or acquaintances.
I know that there is the 72t rule. This seems logical for someone who may be in their early to mid 50s. But it does not seem practical for a 20-30 year time span.
Thanks for your input.