Quote:
Originally Posted by Buehler445
Congrats on maxing out your 401K. That's ****ing awesome. Seriously.
If your company is offering a backdoor Roth, I'd probably do it. I haven't done one, but if a qualified plan is offering it, I'd be down. My comment about making sure you like your investments in your plan still stands. Seems like companies have gotten more progressive recently, but I don't know, I'm kind of out in the cold these days. If you're comfortable with the funds, I'd probably do it.
That being said, I'm like 1,000% more cash conscious than I was a couple years ago. Now that you can get 5+ for holding cash and borrowing money (probably) won't outperform the market, I'm holding a lot more cash than I have in years past. When I could get 2% money I didn't have a problem financing a car for instance. Now, if it's going to cost 8%, I'm not feeling it. So I'm keeping cash back for those kinds of purchases, where I did less before. 1. I'm incentivized to do so. (Cash is unlikely to outperform inflation, but 5% is much closer than 0%, especially when historic return of the S&P is 8% cash is much more attractive), 2. The cost of a little liquidity is substantially more expensive.
Accordingly, if you don't have a good bit of cash that's liquid, I'd leave some out, just for in case shit money. Once it goes into the tax shelter, it doesn't come back out.
VTI is a total market fund, so it has every stock on the market. I've considered it because it is as diversified as you get, but it has all the losers too. VOO (S&P) just has the biggest 500 companies, so there are less likely to be big losers (but it's not impossible, see GE, Philip Morris, etc).
Again, JMO. I'm certainly open to being a dumbass.
|
I was raised pretty conservative financially, so stocking away for retirement has always been on my mind, been contributing to 401k since I was 21. Now that I'm getting closer, trying to figure out how to speed this thing up, lol. I'm pretty cash flush right now, so trying to fix that, but will definitely keep some liquid cash in a HYSA. Appreciate all the input!
Quote:
Originally Posted by lewdog
If you are within 10 years of retirement, I don't think the backdoor Roth will make a lot of sense with the tax burden it creates. If you are younger and a ways from retirement, absolutely convert it now.
|
What am I missing on the tax burden of a MBDR? My understanding is that the money goes in post-tax, but the growth is untaxed at cashout. So, instead of putting money into the market today and being taxed on growth, that same money could go into a MBDR and come out tax-free. Am I wrong there?