more than you want to post on an open forum like this. Case Study #3: Let's get Tom to Latin America! Im debt free, living at home, and have very low expenses thanks to Mom & Dad. How I lost money in real estate before it was fashionable, Part II: The Limits of the Law. Over 15 years that should give you the best end result. I am currently contributing 6% into my works 401k to receive the full 5% matching contribution, and am now sold on pouring the rest of our savings into VTSAX. and find this on the opening page: Other ways to save for education goals Also, pregnancy or marriage would end it as well. Warren Buffett, the greatest investor of my age, said When others are fearful be greedy. 17:47-23:40 J.L.'s advice on investing: the simple things are the most worth it. She earned a Bachelor's degree in, Journalism and Communications from Northern Illinois University and. High management costs (max 0.90% pa / min 0.35% pa) You gave me a lot to think about. I have an ISA in FTSE All Share Index, but I just want to make sure I start investing on the right foot. Your first source says the ~14-year (since inception) return on VTSAX is 5.5% and the second says 5.2% for the Vanguard total stock market index. Id be curious to hear more of the details concerning your move from Edward Jones. No exotic, hard to understand investments, No weekly, monthly or even yearly management, This is an index fund. You can learn more about exactly what that means anytime (. Using the 4% annual withdrawal guideline, a nest egg of $476,477 would net you $19059.08 annually which exceeds your living expenses of $18k which we came to above. They, too, are wrong. Hi there great article! https://jlcollinsnh.com/2013/05/02/stocks-part-xvii-what-if-you-cant-buy-vtsax-or-even-vanguard/ I hope your mom is one of those. Stocks -- Part IV: The Big Ugly Event, Deflation and a bit on Inflation. Congratulations on your progress so far. Kudos! Still, I really feel like I can do this with a little guidance, which you are providing. The details will vary country to country, but the principles still apply. This is episode number 116 featuring Jim Collins from jlcollinsnh.com. First of all, a hugeTHANK YOUto everyone who submitted their story last year! Maybe it wasnt me. (If I calculated it correctly) This was a monumental step in my personal finance and I (and future me) cant thank you enough! All of this is explained in detail here: https://jlcollinsnh.com/2014/08/25/stocks-part-xxvi-pulling-the-4/, Dear Mr. Collins, I am 34 and will probably have to work for another 20 years so looking at long term investing. Since my daughter started working, I do something somewhat similar. Ill start work on it. That said, presenting 10-12% as a realistic annual expectation year over year is the problem. One thing to keep in mind (also Australian) is that even with the dividend reinvestment plan, you are *STILL* losing 37% to the tax man. Right now I am trying to choose between the following: What do you mean by simple and complicated investments? I think this is unlikely as the public outcry would be huge. I guess I just dont fully understand how that works. Your advice is perfect but hard to follow emotionally by most. This is the last article I will ever read on personal finance as I cant bare to make the same mistake. A Roth IRA is NOT tax deductable in the year the contribution is made and again your kids income must be below certain limits to open one. Two years ago it was at 670 and people were predicting with certainty it would go to zero. The chance to grow for decades tax free and be withdrawn tax free is almost priceless! I have no student loans (due to MANY scholarship applications) and maxed out Roth last year. People still refuse to believe I have never had a car payment. Where is she going?? Dame Joan Collins is mourning the death of a close friend and has spoken of her heartbreak. My wife and I want to retire comfortably like they will and thinking about investing in that path too. That for you to decide. The deal with $X was that I got to keep the extra (the converse of having to make up the difference), so I have a pretty nice stash for someone who is 20. The most valuable thing you can buy with money is not cars or clothes or vacations or houses. Money grows tax free in his name. Actually a bit sooner. JL Collins is a well-known investing expert, and he has some strong opinions when it comes to investing firms. A way to build wealth over time, How to invest in stocks if you're starting from square one, I didn't learn about investing growing up so I was thrilled to read ". How did you arrive at 8-12%? 40K each in fidelity and TIAA-cref Id move these to Vanguard index funds. After reading your posts I am very keen on opening a Vanguard account. Even its expense ratio, at .09%, is excellently low. But fortunately, my European readers do. I said no thanks, which the majority of people do. Both due to the short duration of the funds invested, and because of tricky situation of people we know in common, I didnt feel it was diplomatic to all the sudden use the phrase your service is no longer needed. No one taught me, and at 46 years old, I am in really bad shape financially. Now my goal is to have 4000 by the end of the year. . Not sure I totally agree with home ownership portion, but can see the point. If you are in the wealth building phase and you have determined you can ride out the gut wrenching drops that will surely come along the way without panic and without selling, just keep adding to VTSAX when you can and as much as you can. If youre just beginning your journey to financial independence, or if youre 20 years in, this one is a must read. Uniform Gifts/Transfers to Minors Act (UGMA/UTMA) How I lost money in real estate before it was fashionable, Part III: The Battle is Joined. Again, many, many thanks. https://jlcollinsnh.com/2014/06/10/stocks-part-xxiii-selecting-your-asset-allocation/. I am 43 years old, married with 3 kids ages 14, 12, and 10. 1. I really like these points except for the investing advises. I think Im retired for good this time (and loving it), but who knows. So is J.L. Case Study #2: Joe -- off to a fast start! Data from studies are clear, if someone in already internally motivated to do a thing, providing some reward for what they do will actually decrease their motivation and negatively affect their performance. Then it is his. From there it might even become part of my second book which I intend to be based on these. Yikes. I have tremendous respect for the courage it took walk that path. In The Simple Path to Wealth, JL Collins recommends Low-Cost Index Funds. People forget that stocks are not just pieces of paper traded. What would you suggest, IRA or Investments? Heres what I said in my original comment to you: Ramsey is worth reading but he is way off base on his 12%. When you factor in extra fees and interest, maintaining debt balances long-term will set you up to enjoy less freedom. Over the past two months, I have moved my money from American Funds (with 5.75% front-end loads with high expense ratios) to Vanguard, in VTSAX. Ive been doing a lot of reading in your blog lately and totally love every single one of them. Most folks will disagree with my stance on home ownership. But what determines whether it will make you wealthy or leave you bleeding on the side of the road is what you do during the times it is collapsing.". Case Study #I: Putting the Simple Path to Wealth into Action. I come from an economically depressed area of the US , so I never learned about money or respected it. Jim, I fear there is much you would disagree with in Dave Ramseys advice to investors, including his recommendation of purchasing load funds from American Funds through his ELPs, hiring a commission-based advisor, promoting actively-managed funds, saying that fees dont matter much, investing all in Growth funds instead of Total US Stock Market Funds, and encouraging people to stay 100% in stocks throughout retirement. Guess I should be used to it. Youre a SAINT, thanks for helping us all! Stocks are pieces of ownership in operating businesses. Or even Vanguard? 3. If we keep our eyes open, our children will amaze us. That is why you have tried to cater your blog to them. Over that extended period, provided you have the courage to stay invested during the gut wrenching drops, you can indeed expect 10%+ returns. Ally, There is a lot wrapped up in your questions. Index, VTSGX Total Intl Stock index. There you have it. Only $500/year. Financial geeks like me are the aberration. Or not. The S&P 500 hit an all time high yesterday, consistent with your mantra, the market always goes up. We have our health care thru her work. Nice to here from you! Did you mean 3-4% of the money you have invested and working for you (i.e. Love you blog Will you please help me understand something? They then set the payouts accordingly and low enough that they are left with handsome profits and plenty of money to pay those who live for an exceptionally long time. I just wont be able to live off of them until 59.5 years old? Just keep investing. I guess it could be worse! (Ramesys 12% is an outlier). United Kingdom Still it surprises me. Personal Capital special Valentines Day promotion, http://blog.famzoo.com/2011/04/pave-road-to-retirement-for-your.html, https://jlcollinsnh.com/2015/06/02/stocks-part-viii-the-401k-403b-tsp-ira-roth-buckets/, https://jlcollinsnh.com/2011/12/27/dividend-growth-investing/, https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT, https://jlcollinsnh.com/2011/06/03/my-short-attention-span/, https://jlcollinsnh.com/2011/06/06/why-you-need-f-you-money/, http://beyonddave.com/2011/06/teach-your-children-well/#comments, https://jlcollinsnh.com/2011/06/07/the-myth-of-motivation/, https://jlcollinsnh.com/2012/12/07/stocks-part-xiii-withdrawal-rates-how-much-can-i-spend-anyway/, https://jlcollinsnh.com/2012/05/26/mr-money-mustache/, https://jlcollinsnh.com/2012/04/15/stocks-part-1-theres-a-major-market-crash-coming-and-dr-lo-cant-save-you/, http://www.madfientist.com/traditional_ira_vs_roth_ira/, https://jlcollinsnh.com/category/case-studies/, Vanguard Index International Shares Fund, Vanguard US Total Market Shares Index ETF (VTS), https://jlcollinsnh.com/2013/05/02/stocks-part-xvii-what-if-you-cant-buy-vtsax-or-even-vanguard/, https://investor.vanguard.com/what-we-offer/college/overview, https://jlcollinsnh.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/, http://www.madfientist.com/traditional-ira-vs-roth-ira/, http://money.usnews.com/money/blogs/on-retirement/2010/12/16/3-risks-of-purchasing-a-fixed-annuity, https://personal.vanguard.com/vlip/Pdf/s433.pdf, https://jlcollinsnh.com/2013/05/22/stocks-part-xviii-investing-in-a-raging-bull/, https://jlcollinsnh.com/2012/06/06/why-i-dont-like-investment-advisors/, https://jlcollinsnh.com/2014/01/27/stocks-part-xxi-investing-with-vanguard-for-europeans/, https://jlcollinsnh.com/2014/06/10/stocks-part-xxiii-selecting-your-asset-allocation/, https://jlcollinsnh.com/2014/08/25/stocks-part-xxvi-pulling-the-4/, https://jlcollinsnh.com/2014/11/12/stocks-part-xxvii-why-i-dont-like-dollar-cost-averaging/, https://www.vanguardinvestments.com.au/retail/ret/investments/funddetailVISIF.jsp, https://jlcollinsnh.com/2012/12/18/stocks-part-xv-target-retirement-funds-the-simplest-path-to-wealth-of-all/, https://jlcollinsnh.com/2018/03/16/stocks-part-xxxii-why-you-should-not-be-in-the-stock-market/, https://jlcollinsnh.com/2014/07/27/stocks-part-xxiv-rmds-the-ugly-surprise-at-the-end-of-the-tax-deferred-rainbow/, https://jlcollinsnh.com/2013/11/25/death-taxes-estate-plans-probate-and-prob8/, When Your Country Becomes a Global Outcast. 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