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Peanut Butter

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Hey good folks 22 year old PB here. I just opened a Roth IRA. Do any of you know anything about target retirement fund? Just looking for some advice so I can retire as soon as possible
 

triplestack3

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Getting started early is 9/10's of the battle.
This 100%

@Peanut Butter we talked about using a Roth IRA calculator to see how much of a difference it makes starting early. That was my one regret, not starting earlier.

Also consider that $1M probably won't have the same value at retirement that it does today. You may need closer to $3M.
 

Bigigloopt2

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Also, all this to say. Only 15-20% of Americans have enough in savings to cover a $1000 emergency. So needless to say, even if you only get 500k-1million by retirement, you’re wayyy ahead of the game. Compound interest alone of 1mil is enough to live off of.
 

mark23

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This 100%

@Peanut Butter we talked about using a Roth IRA calculator to see how much of a difference it makes starting early. That was my one regret, not starting earlier.

Also consider that $1M probably won't have the same value at retirement that it does today. You may need closer to $3M.
^^^^ This. Starting early has a dramatic impact. There's a visual somewhere but essentially it's impossible to catch-up starting at 42 vs. 22 even contributing multiples more. The downside is you are starting at all-time ridiculous highs. However, you'll dollar-cost average over time. Just don't panic the next time it crashes, because it will. Hold the course. Those who try to jump out when things are falling always end up timing it wrong.

Like an idiot, I didn't think Trump would win. I had pulled all our 401ks into stable value. I sat on the sidelines and watched the market soar for quite a while before jumping back in. When I did buy back in, I added about 10% of the balance back every 2 months to dollar-cost average in.
 

triplestack3

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^^^^ This. Starting early has a dramatic impact. There's a visual somewhere but essentially it's impossible to catch-up starting at 42 vs. 22 even contributing multiples more. The downside is you are starting at all-time ridiculous highs. However, you'll dollar-cost average over time. Just don't panic the next time it crashes, because it will. Hold the course. Those who try to jump out when things are falling always end up timing it wrong.

Like an idiot, I didn't think Trump would win. I had pulled all our 401ks into stable value. I sat on the sidelines and watched the market soar for quite a while before jumping back in. When I did buy back in, I added about 10% of the balance back every 2 months to dollar-cost average in.
I believe that trying to time the market isn't a good substitute for a sound overall investing strategy. I've tried to time the market before in commodities trading and my results were... mixed at best. In hindsight, just staying the course would have had the same result or better without all the hemming and hawing. What you say about dollar cost avg over time is so true when investing early. There's simply more time available to average out market swings.
 
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Leshaire

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28 here, started my Roth IRA around 20 and maxed it out every year the first 6 or so years, been adding less aggressively since then because now I have some 401K matching at my current job and I put about 8K a year into that so the money I put in the IRA is much less than before. Time is on your side. BUY AND HOLD. Buy across industries. Don't put all your money into tech or gold or only US held companies or target date funds. Shit I don't like target date funds much at all tbh. I have a few funds and ETFs but the best thing I ever did was read a book on deep value investing, take the highlights, and invest in solid companies.

DO NOT mix emotions with investing. Like Mark said, don't bail when something goes a little south, simply buy more at the discount ;)

Another tip, buy into necessary goods and services. I read that in a book years ago and it clicked. What do people need to survive? Look into those industries then pick decent companies that aren't overvalued, look to have a bright future, have the cash on hand to overcome obstacles, and have a decent track record. Think shelter, transportation, food, clothing, personal hygiene, pharmaceuticals, etc. Some examples that have been crushing it for me are General Mills, Home Depot, Honeywell, Hershey, Johnson and Johnson.

Although, tech companies are my biggest gains. I've held on to Apple, Google, Amazon, and Tesla for years and they have been ridiculous. I held Netflix for a long time too and made a ton on it and finally ditched it late 2019 due to the additional market pressure and their lack of a unique value prop recently.
 
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Leshaire

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Are you maxing out your 401k first?
Max out a Roth IRA before a 401K. Tons more way better investments to be had vs a handful of meh funds. Better tax situation at retirement age, and more flexibility if you need access to it.
 
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mark23

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And while I do know what to do, I've been terrible at following my own advice. Generally speaking, you should never buy single stocks. You can get lucky, but there's just too much volatility/risk in a single stock. Low-cost ETFs are a good way to go outside of target-date funds.
 

mark23

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Max out a Roth IRA before a 401K. Tons more way better investments to be had vs a handful of meh funds. Better tax situation at retirement age, and more flexibility if you need access to it.
Eh, that's not a hard rule. We have no idea if the government will change rules on Roth contributions in the future or what future tax rates will be. A reduced income via a traditional (not Roth) 401k is at least a known.

Assuming tax rates go up in the future (likely) and you'd rather pay taxes now, a Roth is a great thing. I can't argue with the limited amount of funds generally available in most employers 401ks. However, my company does allow up to 50% of your balance to be self-directed (individual stocks, ETFs, etc.)
 
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Leshaire

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And while I do know what to do, I've been terrible at following my own advice. Generally speaking, you should never buy single stocks. You can get lucky, but there's just too much volatility/risk in a single stock. Low-cost ETFs are a good way to go outside of target-date funds.
How long do you hold? Are you trying to day-trade single stocks?
 

Leshaire

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Eh, that's not a hard rule. We have no idea if the government will change rules on Roth contributions in the future or what future tax rates will be. A reduced income via a traditional (not Roth) 401k is at least a known.

Assuming tax rates go up in the future (likely) and you'd rather pay taxes now, a Roth is a great thing. I can't argue with the limited amount of funds generally available in most employers 401ks. However, my company does allow up to 50% of your balance to be self-directed (individual stocks, ETFs, etc.)
They up the contribution limit every year or two as is. I see no issues there and nothing to fret over. Why limit your success because you're afraid something may change? Hell, if it does, just roll it over to whatever account you want. No biggie. Takes 20 mins tops.

That is cool you can do that. I have never had the option. I've always had between 10 and 25 fund options and thats about it.
 
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