Investment advice for FIRE
Hi Blind community, I need investment advice from the high TC veterans. Current TC is $162k cash and some stocks. I am 24 years old and I have no debts except for a car payment. My plan is to put 6% into 401k and put rest into Roth 401k up to $20,500 limit and I would max out mega back door Roth up to $40,500. The remaining money that I would save would go straight into a brokerage account. I don't plan to buy a house for the next 4 years so I don't want to save up money except for an emergency fund My plan is to put all this money into different Fidelity Index funds and I am also open to suggestions on what index funds have given you the best benefits in the past years. I want to be aggressive because I don't need this money for the next few years. I’d massively benefit from your suggestions #personalfinance #investments
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Your approach is good. Max out pre-tax first. Max out post-tax backdoor second. Invest the rest in Index funds. However, just remember that you can't access your 401k and IRA before 59 1/2 without penalties. You're 24 and wanting to FIRE early (earlier than 59) so you'll need to plan to have enough in your individual investment accounts to cover the gap. This is an extremely high savings rate to pull this off. Are you still living with your parents? How do you have enough left over to cover rent, utilities, food, clothes, dating, etc?
All Roth contributions can be withdrawn without penalties. Plus there are other ways, like 72t plan and conversion ladder. That money isn’t really locked in
Fskax
If current tc is 162k (high income tax) why use roth 401k instead of traditional pre-tax 401k for employee $20,500 maximum? You could convert all that pre-tax over to roth tax free if you plan it out correctly. Definitely max out the rest to the 401k $61,000 annual maximum, then contribute to brokerage with excess beyond that. Just pointing that out if you are looking for fastest fire method. You'll need to work towards saving 50-60% of annual after-tax income to hit fire in 6-11 years (market dependant)
I was planning on having a mix of pre tax and post tax. What you suggested makes sense, that’s what an investment advisor suggested too. Thanks for the comment