Dec 18, 2017
#108: Former financial advisor Joe Saul-Sehy joins me to answer audience questions about investing strategies, early retirement, and tax planning.
Whitnee calls in with this:
I'm 31, and my husband and I save half of our combined income. We've maxed out our H.S.A. accounts and we're getting an employer match in our 401k. We have $80,000 stashed as cash in a checking or low-yield savings account.
We're paying nearly $2,000 per month for insurance policies, most of which is a whole life insurance policy. We have a rental property that cash flows $210 per month; we pocket $150 and use the other $60 as an extra principal payment.
What should we do differently? How can we learn about investing? What funds should we focus on? Should we sell our rental property and invest the proceeds, or hold onto this? If we hold, should we focus on repaying the mortgage as quickly as possible?
Kim asks about the 4 percent withdrawal rule in early retirement. When you're calculating your savings goal, do you need to account for the tax implications of this withdrawal? Any tips on how to optimize this?
Susan says:
I loved your explanation about how to use a Roth Conversion Ladder
to avoid paying stiff early-withdrawal penalties in retirement.
(Episode 94).
Here's my follow-up question: How long should my money sit inside of a Traditional IRA before I convert it to a Roth IRA?
We tackle these three questions on today's episode. Enjoy!
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Resources Mentioned:
Whitnee's question:
Books:
Investing Made Simple by Mike Piper
Can I Retire? by Mike Piper
The Simple Path to Wealth by JL
Collins
The Little Book of Common Sense
Investing by John Bogle
The Wealth Barber by David Chilton
The Truth About Money by Ric
Edelman
Websites:
Oblivious Investor by Mike Piper
FINRA Broker Check
Afford Anything article: I Don't Know How to Start Investing
and I'm Afraid of Expensive Mistakes
Kim's question:
Two articles critiquing the 4 percent withdrawal rule:
- https://www.americanfunds.com/ria/insights/can-i-retire-at-40.html?cid=sm_tw_50306
- https://www.cnbc.com/2014/11/03/the-4-retirement-rule-is-broken-and-heres-why.html
Susan's question:
Episode 94 - The Early Retirement
Episode