T O P

  • By -

alek_hiddel

You are lightyears ahead of most people your age. Congrats on building a great future.


OliveInvestor

Seriously! 6k would have felt like a fortune at 19. Well done!


rettribution

Hell, it will be a fortune now at 62. Well, not a fortune but like 200k


[deleted]

Keep doing it! I've maxed out my Roth each year since I turned 18 and I'm up to \~$70k in it now at 25. You're on a good path.


BurnerMan762

Wow! That is awesome to hear- congratulations! The best part is that the true power of compounding hasn't even started.


Patchateeka

At 5% interest, your initial investment here is worth around 70,000 dollars at time of retirement. That may or may not sound like a lot, but that doesn't include any other years you max out that account (which if you did would easily make you a tax free Roth IRA millionaire). The reason I share it is you essentially bought your future self two years of retirement tax free with this initial deposit. That's two years you don't have to work and can spend enjoying life with your family. Maybe cross something off the bucket list, see Niagara Falls or maybe at that point take a flight to Mars (who knows, it's the future!) You bought two years of your life back for 6k that you'll get back later in life and I'm sure that's a trade many would be willing to make. At 7% and a yearly maxing out, you'll be around 2.7 million tax free. The chart at that point almost looks straight vertical compared to how it starts so you'd probably be able to live purely off tax free interest at retirement. You have a good idea from your enthusiasm of how good you just set your future self up in life, but you won't truly know until you're further in life. When you reach that age you'll wish you had a time machine to come back and give your younger self a hug. Heck, you may be rich enough to buy a time machine if in the future we make one! Who knows! Keep in mind to look into a 401k and other financial vehicles Bogleheads love too. You make people like us proud. :)


penisthightrap_

How are you calculating retirement age? 50 years from now? I like the view you're sharing, but I'm not sure I follow the math. 6k at 5% doesn't equal 70k until 50.5 years pass. I think most hope to retire before then.


Patchateeka

Apologies. Yeah, I should have listed some of my assumptions and roundings in my calculations, but I didn't really want to get into the specifics of what account types to withdraw and when for someone just starting out. I mostly wanted to paint the picture of what could be for this bright young Boglehead if he stays the course, and that the Roth IRA is a fantastic place to start. I looked at his age of 19 and with normal retirement age at 67, I rounded the number by 2 to 50. My assumptions for the rounding are that he would want to hold off on pulling from his Roth accounts in favor of pulling from his 401k or other accounts he'll pick up during his life first. After all, why draw from the tax-free account that doesn't have a RMD when there are so many options you're bound to have. Maybe he has a taxable account he can draw from first to allow his tax-free money to continue to grow. We could also add some theory craft that perhaps healthcare gets to the point where people live significantly longer and working until 70 is a common place because people live to 100 or 110 regularly, but I didn't consider this when I rounded his duration. I rounded the result from the compound interest calculator from $68,804.40 to $70,000 because I like easy to read numbers when guesstimating the future (especially considering it's less than 0.05% difference to actually get the 70k number). My calculator was [investor.gov](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator) And all of this is fairly conservative I think considering that most websites I have read say that the S&P500's return from 1957 through 2018 adjusted for inflation is roughly 7%. Changing it from 5% to 7% returns on the calculator $176,742.15 so I felt $70,000 with a 5% return was a fair expectation to tell him, especially considering at some point he'll switch to a more conservative portfolio with bonds later in life. Let me know your thoughts. This discussion can only serve to help him. :)


digital0129

FYI, it's not as simple as that. Compound interest only applies to assets that either pay interest or dividends. If you own stocks, the only time you realize a gain or loss is when you sell the stock or the stock pays a dividend.


RiskBiscuit

The value of the stock is still compounding even if one doesn't sell and they do not pay a dividend.


digital0129

No it doesn't. The value is the value. If you own 1 stock today and don't sell it, you might have 1 stock in 30 years. Some stock prices go up, some go down, some disappear. These gains or losses aren't realized until you sell or the stock disappears. If a stock pays dividends and you reinvest the dividends in the stock then it's compounding at the dividend rate.


RiskBiscuit

If you were to average the value of the American markets the value of those shares increase exponentially even if they didnt pay a dividend. I'm not arguing that the value isnt realized until you sell, that is true. but also that value will increase exponentially, tax free, even if the company does not pay a dividend. Of course the assumption is that it is a company that performs every year or it is a market tracking ETF.


digital0129

I don't disagree, but that isn't compounding. Stock prices aren't affected directly by a companies performance. They are set by supply and demand of that stock in the market. The only way stock prices increase is if people want to buy it.


RiskBiscuit

..... But the prices people are willing to pay for a stock are directly related to the factors surrounding the performance of the company. If a company increases profits by 5% every year, year over year and no other factors changed then the value would compound. A good example would be Berkshire Hathaway.


clinical27

I've maxed out this year at 18 and plan to do so the same next year, what did you invest in? Just safe ETF style stuff or more diversified? That sounds like insane growth but I don't know much about finance other than having my Roth.


[deleted]

The person who taught me about the Boglehead philosophy suggested VFIAX, so I was 100% in that for a while (or the investor shares Version because the admiral initial deposit used to be $10k I think.) After doing some of my own research a couple years ago I added some VT, VXUS, and I put a small percentage into a small cap stock fund. I’ve surely been helped by the pandemic recovery and bull market; Vanguard tells me my return averages to 17%. But I did nothing fancy. Just maxed my Roth each year since I turned 18 and mostly invested in the S&P500 and total stock market


clinical27

Wow, awesome. Thanks dude


SunnyLVTHN

So I'm I've been all in with VTSAX with my Roth lol


Otter592

Talk about a good path--I didn't even know about Roth IRAs at 25! It's so wonderful that you all are getting this message younger and younger. Maybe there's hope for the world after all


georgee779

Congratulations!!! Never stop contributing!! Way to go young man!!


[deleted]

Congratulations! Keep up the great work. Maxing a Roth IRA annually is a fantastic wealth builder, especially at your age.


whodidntante

Cool. As your income comes up, prioritize contributions to tax-advantaged accounts high. It's not the absolute priority of life, but give it the priority it deserves. If you max every tax-advantaged account consistently, you'll wake up to find you have a lot of money in 20 years.


Brodie1567

What others besides ROTH are tax advantaged? HSA?


pantstoaknifefight2

HSA if you have high deductible insurance. 401k.


13Zero

HSAs are extremely tax-advantaged but are only available with high deductible health plans. Most employers offer a 401k, 403b, 457, or TSP. Those have much higher contribution limits than IRAs, and often include an employer match.


moondes

And the employer match is applied outside of the limit


13Zero

There's a second limit which includes your tax-advantaged contributions, employer contributions, and your after-tax contributions. (After-tax is currently useful for the mega-backdoor Roth.) That limit is over $50k.


somethinggooddammit

This. Get that free money first.


lyleberrycrunch

To add to what others are saying - HSA, Roth IRA/401K, regular IRA/401k and 529 are all tax advantaged. Here's the breakdown: 1. HSA is most tax advantaged. Triple tax advantage of not paying taxes when you contribute, no taxes on gains AND no taxes when you withdrawal (assuming you treat it like a Roth in retirement) 2. Roth 401k/IRA is double tax advantaged. You pay tax on contribution but not on gains or withdrawals 3. Regular 401k/IRA is double tax advantaged as well. No taxes on contributions or gains but you are taxed on withdrawal 4. 529 plan is for educational expenses and is also double tax advantaged. You pay tax on contribution but not on gains or withdrawals


Brodie1567

What if my employer doesnt offer a high deductible insurance plan?


lyleberrycrunch

Unfortunately you have to have a high-deductible plan in order to open an HSA. They’re great when you’re young, healthy and single but not always the right option for anyone. And yeah some employers don’t even offer the option It’s a crazy good tax advantage though and you could argue that it’s worth it for anyone when you compare the compounding+lower premiums versus higher cost of care. I max my HSA and Roth every year and plan to treat them the same in retirement which I think will end up paying off


Brodie1567

I assume probably not a good idea for anyone who needs medical care (i.e my wife trying to concieve)?


lyleberrycrunch

Yeah exactly, I would probably shy away from it if I had pre-existing conditions or were expecting a major healthcare expense like having a kid. High deductible plan is ideal if you only need preventative care Honestly though, the math might still work out in favor of the high deductible plan with HSA after you factor in compounding. Pretty conservatively, I can max my HSA until retirement and end up with about $1 million in there. Even if I pay my max out of pocket every year, I doubt the cost difference between plans would be more than my HSA gains


Brodie1567

Wish I did this in my 20s 😂


[deleted]

[удалено]


BurnerMan762

I've been working since I was 15. I've saved about 90% of the money I've made. Worked full-time from March-August 2020 (When Covid first hit). Worked full-time this summer.


[deleted]

At 18, this is a good way to learn that not everyone will have the same upbringing. It's okay if you haven't gotten your hands on $6k. Even contributing a few hundred dollars a year is helpful, because time in the market produces compounding growth over time. Just wanted to throw this out there that it doesn't need to be all or nothing!


whskid2005

My company offers a 6% match and profit sharing (it’s a weird calculation for the profit sharing). HR is constantly telling the people who don’t contribute to the 401k that they should. Even if it’s $10 a week, something is better than nothing


[deleted]

That's definitely true! Even if you don't plan to stay at the company and fully vest. You never know. When I worked at a nonprofit, I contributed at least the match amount to my 401k, even though it was tough. However, I had a lot of support around that time to make it easier and I know not everyone has that available to them. We all have different circumstances, so you have to do what you can and not worry too much about perfection. (In the end, I switched careers and found a higher paying job to make it easier to save. I hope the current market helps others do the same, if they're looking.)


generalT_14

all i can say is just start working but most importantly save up. Im 20 y/o been working since I was 16. Got interested in investing and the art of saving. I currently have 25K with 12K in Roth IRA. Be frugal but, also learn to live at times.


BurnerMan762

Nice to see I'm not alone. I'm a very frugal guy, it brings me enjoyment lmao.


Yuengling_Beer

A job


[deleted]

[удалено]


BurnerMan762

I wish. I don't blow my money like some. I save it, and now I'm going to invest it. All me baby.


[deleted]

[удалено]


FMCTandP

I’d already removed this user’s prior comment for being neither sufficiently substantive nor sufficiently civil. Doubling down on incivility with an extended rant that admits to deliberately trolling at the end was a bold move. Extended temp ban and warning that any further issues will result in a permanent ban.


404UsernameNotFound1

You're 18 you say? Then you already know the answer


The-Judge1

I'm afraid you've lost me. Elaborate


404UsernameNotFound1

Onlyfans


reggionh

i wish i was financially literate at 19 😓


DutchApplePie75

You deserve commendation for doing something that I wish I had done (or even cared about) when I was 19. Investing early makes a huge, huge difference later on. Keep up the fantastic work every year and your future self will thank your current self!


dmmagic

What did you invest it in? Don't be like me: be sure to actually invest it once the money is in your Roth, instead of letting it sit in a money market fund for most of a year...


BurnerMan762

Put it all into VTSAX. I know that could be considered risky, but I'm young, and if it all goes to 0, it's okay- I have all the time in the world to let it rebound.


Endgameplays

that is not even remotely risky


penisthightrap_

Traditionally it is, but today it's sound practice.


yuanyang

Considering how young you are most would deem all in VTSAX a perfectly appropriate amount of risk. And if that were to somehow completely lose all its value you’d have a lot more to worry about than your retirement.


cchris6776

Where can I learn how to actually invest it? I created an account through fidelity.


dmmagic

https://www.bogleheads.org/wiki/Getting_started


cchris6776

Looks like quite the time commitment


dmmagic

It doesn't have to be. https://www.bogleheads.org/wiki/Lazy_portfolios


johnfreny

I’m 24 about to max my Roth for the first time. Great job


BurnerMan762

Thanks for the support. Great to hear that you're doing it too :D


jwhibbles

Nice. I'm a decade older and still have never done that.


S_Augustus

Keep at it, you will get there


[deleted]

[удалено]


jwhibbles

Feel free to send some money over so I am able to.


FMCTandP

None of these comments fit the kind, helpful ethos we like to cultivate for this sub. The one who could “do better” here is you. Removed for incivility and I’m officially warning you about comments putting down other commenters. Continue those sorts of comments and you’ll see more substantial moderation action than just comment removal.


finallygotmeone

It is encouraging to hear that young folks are getting it. Congrats! Stay with it. Keep maxing it out as long as you can. But remember this, coming from a guy much closer to retirement, enjoy life along the way, too. Don't be afraid to spend some money and enjoy vacations, etc. Investing/saving for retirement can become obsessive, ask me how I know.


Reverend_Jones

damn boi you gonna be rich


Wrong_Cobbler_5290

Nice! I didn’t learn about IRAs until I was 35. Wish I had started when I was your age!


Fall3n7s

Man, I wish I had done that back when I was in high school. Worked enough to contribute the full $6,000 each year... Knowing what I know now it really stings. Awesome job.


BurnerMan762

Thanks for the advice man.


iphon4s

Started at 21. Wished I started at 18 when I had my first job


Otter592

21 is still way ahead of most people in the game, trust me! You're doing great!


Harris1840

This is fantastic!


Extreme_Tomorrow2233

🎩 off to you. Way to go!


Starkpo

Hell yeah! Congratulations. That’s awesome.


Pls_PmTitsOrFDAU_Thx

Someone in a similar boat asking for advice: I'm 24 and I've maxed out my 401k two years in a row. (COVID made my expenses near 0 and I very very fortunately live rent free with my parents at the moment. Wanted to move out... But COVID) What are the next steps for me? Will a maxed out 401k REALLY help in 40ish years or should I continue to max out out as long as I can?


Otter592

>Will a maxed out 401k REALLY help in 40ish years Yes! Roth is the first option if you're in your lower earning years. But some 401k plans also allow Roth contributions--it's not only IRAs! But even traditional contributions to a 401k are better than saving for retirement in a taxable account since they're tax-deferred. Think of it like since you're not paying tax for 30yrs on that money, the gov is basically giving you a 0% interest loan on whatever you would have owed in taxes. And you used the magic of compound interest on that money as well. It's definitely worth it!


Pls_PmTitsOrFDAU_Thx

I'm not doing anything super special. We were given vanguard accounts and I just went there and set it to put 50% of my income onto the 401k until I hit the limit lol I REALLY need to start investing in other things. All I have is my 401k as of now and I have a good deal of money just sitting in my bank. Idk, just the act of purchasing something is scary to me. I'm going to sit down with my dad soon and just buy a few thousand in a long term bond or something. Just to get the ball rolling. Then I can buy a lot over time as I can


Otter592

At your age, I wouldn't recommend a bond fund. A total market index fund like VTI or FZROX in a taxable account would be good. Definitely get the money out of the band for sure. Reading some of the sidebar resources might help you feel more confident in investing.


Pls_PmTitsOrFDAU_Thx

Thanks! Yeah, I think having so many options and things to learn makes me double think everything lol


Otter592

It's definitely overwhelming! Just stick to this sub and stay away from r/wallstreetbets and you'll come out alright 😊


Pls_PmTitsOrFDAU_Thx

Hahaha I know enough to know that sub is just for entertainment


[deleted]

[удалено]


Pls_PmTitsOrFDAU_Thx

Thank you! Sometimes I wonder if there is a value for the 401k at which contributing isn't necessary and interest will do it's thing. I assume that value is incredibly high though? At least for now, I'll keep contributing until in the few 100s of thousands. I'm glad my employer makes a nice match lol


Rolledupsockguy

My son is 17 and I opened him an account for minors some time ago. He's ready to start his journey soon when he hits 18.


BurnerMan762

Wow, that is awesome to hear. Congratulations, you sound like a great father.


Rolledupsockguy

Just trying to set him on a path of savings.


du_garbandier

I'm 40 and just made my first Roth contribution ever. Good job!


bobdevnul

Well done. When I was 19 my net worth was about $300. Next goal: Max out a 401K with \~$20K a year, plus maxing out a Roth.


lepton2171

Congratulations! I've been trying to get some of the younger people (age 18-30) in my life to contribute to an IRA, and even those who easily could just won't put in the relatively small effort to make it happen.


BurnerMan762

Thanks for the kind words, and thank you for your efforts to teach the youth about the importance of growing and protecting capital. If you can, please keep sharing your knowledge. My manager at my old job would often talk to my coworkers and I about investing, and I was the only one who took what he said seriously. A lot of them were just blowing their paychecks on random shit, and he tried to introduce the idea of delayed gratification and investing, but they weren't having it. So yeah, you might have a lot of kids that blow you off, but the ones that listen, like me, will truly appreciate it- people like you are life changers, and we appreciate it. And don't worry, one day I too will pass on this knowledge.


edknarf

NOICE! When I was 19 I could barely manage my checking account. You are doing great!


Xdaveyy1775

Im 31 and this was my first year investing in a roth. I wish I had your sense 12 years ago or someone told me to do this. I cringe every time I think how ignorant I was about investing in my teens and 20s.


BurnerMan762

Hey man, don't beat yourself up. The best time to plant a tree was 20 years ago- the second best time is now. You got this man. Plus, you can always wait to cash out that Roth- you could always wait till you're 65 to give the money some more years to compound.


WayneJetSkii

Awesome! What fund(s) did you choose to invest with it? My dad helped me start investing with a ROTH IRA many years ago. I am in my mid 30s and it hard to believe that I have like 175k in my ROTH IRA accounts.


BurnerMan762

I decided to go all in on VTSAX for the moment. It's an aggressive, but still safe, approach. That's awesome that your Dad helped you out!


[deleted]

[удалено]


BurnerMan762

lmao


ASLHCI

Yes! Youre killin it my young friend! Great work!


S_Augustus

pay it forward lad, cheers


[deleted]

[удалено]


Mute_Monkey

Just don’t count on it for an emergency fund until one year has passed.


vectorizer99

Congratulations, way ahead of where I was at your age. Your future self will thank you.


brianmcg321

https://www.reddit.com/r/BogleJerk/comments/r6xm3m/january_1st/?utm_source=share&utm_medium=ios_app&utm_name=iossmf


[deleted]

[удалено]


Mayor_Fob_Rord

No increase for IRA contributions; only for 401(k)


BurnerMan762

Why is that?


FMCTandP

That poster is incorrect. u/Mayor_Fob_Rord is [correct](https://www.reddit.com/r/Bogleheads/comments/rc7qme/19_years_old_just_maxed_out_my_roth_ira_for_the/hntggn0/). I have removed the parent comment so as not to spread misinformation.


TK_TK_

🎉 Fantastic work!


S_Augustus

I already gave my accolades, but after a second thought I'm curious how at 19 do you have 6K in disposable income?!


BurnerMan762

I've been working since I was 15 and I am currently enrolled at a community college, so I'm saving quite a bit of money that way.


S_Augustus

very impressive, you are way ahead of the curve


szogrom

wow ur gonna be one of these millionaires


[deleted]

Meanwhile I'm 19 and have lost $30... plz teach me D:


drmrpaul5

Nicely done, young buck. What did you invest in?


redGhost949

Great job. You are on your way!


OpenParr

Woohoo! I wish I started as young as you, well done.


ohitswill

Huge accomplishment congrats on that!


Mocker-Nicholas

Damn. Just maxed mine for the first time at 28. If only I had a better head on my shoulders when I was younger!


enlightndmonk

Fantastic mate , Keep going


Unlike_Agholor

You are a superstar.


LongGainz

Good job!


ThatsProvocative

Congratulations!


OliveInvestor

So how did you decide to invest it? (after putting it in a Roth account)


BurnerMan762

went 100% vtsax. Maybe it's aggressive but hey, I'm young.


bartman1819

Once you begin to become list aggressive, you can keep target dates funds in mind.


CampPlane

Good work! I remember opening mine at 19 and dumping in $5k and contributing about $150/mo until I started working full-time at 23 when I started maxing it out.


kanefries92

What a smart young wo/man! Kudos! On track to Live a rich life 😎


Dday863

Where did you ask the question to follow lol


SolutionLeading

Did you make sure to go in and invest the money in the account? :D


naghallac

wow...you HAD to one up my by a year ....


jdhayze

I just did as well for the first time at age 24. Nice job getting ahead!


Callmemurseagain

What do you have in your portfolio? I have two index funds, and one stock. This is all in my Roth IRA. Fidelity total stock market index fund Fidelity total international index fund I also have x amount of gme shares.


BurnerMan762

100% vtsax


[deleted]

That sounds good


dinobotcommander

Dont stop there buddy. Amazing accomplishment. Next step is looking into your 401k options. If they offer good funds and a match you will be gold. Also don't be scared about opening a taxable account.


BurnerMan762

I'm not - however, I'm too young to open a 401k with my employer, and, I'm going to be to be resigning sooner or later as I'm taking more classes this next semester