2022 is finally over. It has been one of those years where it feels like you are struggling to keep your head above water. No amount savings could turn those net worth graphs green. Most people under 37 years old are probably looking at the first (post college) year of negative year over year net worth growth.
Hello Andre, first thanks so much for all the write-ups. I have been reading your posts you for last few years inside Meta! I was wondering if you could mention any assumptions you are making for 80K total contributions for 529 plans. I am using rough calculations based on cost of private 4 yr college as per https://vanguard.wealthmsi.com/collcost.php#results and s&p returns of 7% as per https://www.nerdwallet.com/calculator/compound-interest-calculator which comes out to ~$200K initial contribution. I assume maybe you are consider in-state colleges which changes the numbers. Did you make any other assumptions e.g. additional funds outside of 529 to help with college costs?
Thanks for the write-up. I definitely love the voiceover as well! One question: why company 401ks are included in FIRE balance but vested RSUs are not? 401k are not easily accessible before 59.5 years old but vested RSU can be accessed anytime?
Jan 6, 2023·edited Jan 6, 2023Liked by Andre Nader
Great article! I noticed that you haven't included maxing HSA in your investment goals. Did something change ?
In 2022, I began investing in a Mega backdoor Roth and HSA for both myself and my spouse. Previously, I limited my investments to 401k and a traditional brokerage account. It's been an amazing experience learning about and getting comfortable with these investment options. I wish I had done my research sooner - but better late than never :)
A few areas that I'd love to learn more about in 2023 are
1. How should I determine how much money to invest through traditional brokerage account vs after-tax roth 401k ? Is maximizing my after tax roth 401k the right step for my personal goals ?
2. I currently don't hold any bonds in my investment accounts - it's all index funds domestic + international. As someone looking to FIRE in the next ~15 years, should I allocate a percentage of my investment to bonds ? My emergency savings account gives me a 3% APY. Is that enough exposure to low risk saving or is investing in bonds important ?
3. Are iBonds right for my personal goals ? Given the market is down, shouldn't I be pumping money into index funds instead of ibonds - especially since I don't anticipate withdrawing this money for the next 15yrs ?
Thanks for the insightful and candid post; appreciate the reflection laced throughout!
One topic I’d love to learn more about is the “After-Tax 401k (which gets auto-converted to a Roth 401k)” - setting this up, ensuring employer is on board, taking advantaged. For the past few years, I cap out my Roth 401k without any regular 401k contributions. However, I am looking to alter that now.
As for your ending question, 2022 has shown me how money by itself is not highly correlated to happiness - instead, the journey (time) could be a much larger force.
I notice a lot of FIRE folks (particularly in America vs. Canada) plan to follow the 3 or 4% rule rather than simply live off dividends for a period of time (say 10 years or so to avoid sequence of return risk) and thus never sell (at least initially) and stocks before eventually living off of a mix of continuing dividends and selling stock (to "die with zero").
I think this is probably the result of the fact that index funds generally have a lower dividend yield than individual stocks (in Canada it's easier to re-create the TSX index of stable dividend paying stocks from the pipeline, railway, financial, and telecomm industries).
Very insightful article, thank you! In addition to all the above investment options, have you evaluated universal life insurance? Do you happen to have any insights into when it would make more sense to go with that option?
Hello Andre, first thanks so much for all the write-ups. I have been reading your posts you for last few years inside Meta! I was wondering if you could mention any assumptions you are making for 80K total contributions for 529 plans. I am using rough calculations based on cost of private 4 yr college as per https://vanguard.wealthmsi.com/collcost.php#results and s&p returns of 7% as per https://www.nerdwallet.com/calculator/compound-interest-calculator which comes out to ~$200K initial contribution. I assume maybe you are consider in-state colleges which changes the numbers. Did you make any other assumptions e.g. additional funds outside of 529 to help with college costs?
Where do you put the money targeted for moving fund? And, the house fund?
Thanks for the write-up. I definitely love the voiceover as well! One question: why company 401ks are included in FIRE balance but vested RSUs are not? 401k are not easily accessible before 59.5 years old but vested RSU can be accessed anytime?
How can you do backdoor roth ira would be interested in understanding that piece
Great article! I noticed that you haven't included maxing HSA in your investment goals. Did something change ?
In 2022, I began investing in a Mega backdoor Roth and HSA for both myself and my spouse. Previously, I limited my investments to 401k and a traditional brokerage account. It's been an amazing experience learning about and getting comfortable with these investment options. I wish I had done my research sooner - but better late than never :)
A few areas that I'd love to learn more about in 2023 are
1. How should I determine how much money to invest through traditional brokerage account vs after-tax roth 401k ? Is maximizing my after tax roth 401k the right step for my personal goals ?
2. I currently don't hold any bonds in my investment accounts - it's all index funds domestic + international. As someone looking to FIRE in the next ~15 years, should I allocate a percentage of my investment to bonds ? My emergency savings account gives me a 3% APY. Is that enough exposure to low risk saving or is investing in bonds important ?
3. Are iBonds right for my personal goals ? Given the market is down, shouldn't I be pumping money into index funds instead of ibonds - especially since I don't anticipate withdrawing this money for the next 15yrs ?
Thanks for the insightful and candid post; appreciate the reflection laced throughout!
One topic I’d love to learn more about is the “After-Tax 401k (which gets auto-converted to a Roth 401k)” - setting this up, ensuring employer is on board, taking advantaged. For the past few years, I cap out my Roth 401k without any regular 401k contributions. However, I am looking to alter that now.
As for your ending question, 2022 has shown me how money by itself is not highly correlated to happiness - instead, the journey (time) could be a much larger force.
Thanks again!
I notice a lot of FIRE folks (particularly in America vs. Canada) plan to follow the 3 or 4% rule rather than simply live off dividends for a period of time (say 10 years or so to avoid sequence of return risk) and thus never sell (at least initially) and stocks before eventually living off of a mix of continuing dividends and selling stock (to "die with zero").
I think this is probably the result of the fact that index funds generally have a lower dividend yield than individual stocks (in Canada it's easier to re-create the TSX index of stable dividend paying stocks from the pipeline, railway, financial, and telecomm industries).
Thoughts?
Very insightful article, thank you! In addition to all the above investment options, have you evaluated universal life insurance? Do you happen to have any insights into when it would make more sense to go with that option?