Is There an Optimal 401k Balance?

More on the topic of 401k saving: Can there be an “optimal amount” to have in a traditional 401k? At the very least, adjustments can be made to get close-to-optimal. And timing wise with the calendar approaching mid-year there is ample time (unless you have already maxed out your 401k) to make meaningful adjustments to your 2019 401k elections and start the optimizing process.

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This topic is especially important for those who take saving seriously and who have at least $400,000 TODAY in a 401k or IRA Rollover accounts combined with a 401k account. (For those with less, these concepts still matter but with less urgency.)

First: How old are you?

  • Age matters because TIME is one of the biggest determinants of how much a 401k balance can potentially grow.
  • If you are younger than 40, these concepts could affect you A LOT as the power of compounding can kick in over multiple decades (this does not mean trading; rather saving, allocating and allowing compounding to do its work).
  • If you are older than 60 and nearer to retirement or selling a business, these concepts matter greatly but the solutions will be slightly different.
  • If you are in your 50’s, a combination of strategies can work – and keep in mind the “catch up” that allows you to save more.

Continue reading “Is There an Optimal 401k Balance?”

Luck & Sequence of Returns

Last week’s topic was taxes. This week I’ll talk about luck, which can matter nearly as much to our financial lives. Taxes and luck can go hand in hand – with planning being the link.

The following are highlights from TGIF 2 Minutes one year ago entitled, The Luck Factor otherwise known as “Sequence of Returns.”

Despite all of the calculations involved in investing, there is still an element of luck involved. A specific term for this luck is, “Sequence of Returns.” Otherwise known as risk of timing, which can be the #1 most important concept if you ever wish to spend your savings – and have them last as long as you need.

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Continue reading “Luck & Sequence of Returns”

How Much is Too Much in a 401k?

Now that the 2018 tax filing season is mostly over it is time to talk the reality of 2019 taxes – and more important, taxes beyond 2019. This leads to the question, “How much is too much in a 401k?”

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This subject requires more than one edition of TGIF 2 Minutes. For starters here are a handful of issues, facts and questions to ponder over the upcoming long weekend: Continue reading “How Much is Too Much in a 401k?”

Cars: Costs & Decisions

How much is the “right” amount to spend on BUYING or MAINTAINING a car?? A loaded question. For insight on the answer, know that experts in financial planning cite the “Big 2” expenses of life that must be addressed: Shelter and Transportation. These are the “Big 2” no matter a person’s economic situation. (Note that the experts also say that when analyzing monthly spending, to start with these “Big 2” items, then pay yourself savings monthly, then figure out the rest with Food another “big” and obvious item.)

mercedes benz parked in a row
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Regarding personal transportation, consider the ever-changing world of cars. Cars remain a sizable chunk of our lives in terms of expense, enjoyment …and frustration! It occurred to me to talk a bit about this major expense item when a certain car’s (whose owner will remain nameless) odometer passed the 163,000 mile mark this past weekend. Continue reading “Cars: Costs & Decisions”

Somewhere Between Bitcoin and Cash

PayPal and Venmo: Non-Traditional banking says time and fees

No doubt you have heard of PayPal – and if you have not then read on for a brief introduction. Then there is Venmo, owned by PayPal, which gives you the ability to make payments even more easily in the digital world. Think: potentially saving time and money in a secure way.

cash graph

This is NOT an article about Bitcoin, the non-cash virtual currency which, in the graphic above, would be on one far end of the spectrum (above, far right) …with coin and paper “cash money” on the other end (above, far left). Continue reading “Somewhere Between Bitcoin and Cash”

When Pigs Fly

It’s been a heck of a tax season.

With what started out as a “simplified” tax law, with data already telling us that approximately 85-90% of American taxpayers paid LESS income taxes under the new tax law…. the reality is that the 10-15% of taxpayers who paid MORE federal income taxes under the new law are a somewhat unhappy – justifiably – group of Americans (as well as being you, my friends and clients).

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The $1,100 Cell Phone

Cash flow. Wouldn’t you like to have more of it around tax time? Well then, it may be time to delay or reconsider that new cell phone purchase.

man holding brown leather bi fold wallet with money in it
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Recently this “sticker shock” issue came to the forefront for me when I forked over $1,100 for my new Samsung Galaxy Note cell phone. OK, you may say, “Why didn’t you go with the zero-interest payment plan?” or, “Where have you been, Kerrie?” To which I would respond,

  1. I did not go with the payment plan despite it being zero interest because I am all about having as much free cash flow as possible (therefore minimizing annoying monthly payments) and as little debt (except a mortgage) as possible.
  2. I realize that back in 2017 the $969 iPhone 7 Plus came into being. So, I delayed purchasing a new phone and eeked out as much as I could with the old phone until it essentially ran out of memory and could no longer function as needed.

Continue reading “The $1,100 Cell Phone”