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Timecodes:
0:00 – Intro
0:04 – Cash
1:04 – 401k Employer Match
1:48 – Employee Stock Purchase Plan
2:54 – FREE PDF 1-Page Companion Guide
3:12 – High-Interest Debt
3:42 – Max Out 401K
4:21 – Max Out HSA
5:42 – Backdoor Roth
6:52 – Mega Backdoor Roth
7:49 – 529 Education Savings Plan
9:05 – Taxable Brokerage Account
10:10 – Real Estate
11:38 – Low-Interest Debt
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DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.
► Download Your FREE PDF 1-Page Compansion Guide – Ideal Order Of Investing For High Income Earners: https://www.financialtortoise.com/ideal-order-investing-high-income
In 2024, Don't set new year financial goals without consulting a financial adviser. Their expertise ensures a solid plan for success. Building wealth involves developing good habits like regularly putting money away in intervals for solid investments.
You forgot about spousal Roth IRA, if spouse does not work. You can out the $7k to wife tax free.
This was very helpful, direct, and with just the right amount of insight into the decision-making process, much appreciated. An additional note that may be of use: some HSA’s offer mutual fund options in addition to the traditional savings account. One can mix and match as needed. Some companies will even fund a portion of your HSA.
where would roth ira be in the list if it is possible – in my case i am just under the limit and can invest max into that.. so where in the order should it be? in your opinion
Starting the video with what you would consider a high income earner before jumping into “cash” as an “investment “ would have been a good choice
I lose whatever is left in my HSA year over year. It doesn't roll over.
stock tickers mentioned: VTSAX VGSLX VNQ
My company ESPP is amazing and I love it. Discount and a match.
"passing on to our children the values of hard work and ingenuity" I love this perspective. I feel the same way. I sometimes feel that my children should be 100% responsible for their education because in the pursuit of funding it they will learn many valuable lessons. College is more for certification than it is for learning.
I began my investment journey at the age of 27, primarily through hard work and dedication. I am to share that my passive income exceeded $100k in a single month for the first time. This success reinforces the importance of the advice mentioned earlier. It is not about achieving quick wealth, but rather ensuring long-term financial prosperity.
5.25% interest on your cash in Robinhood right now
HSA fees can be kind of ridiculous though. An annual fee just for being able to invest plus the fees the available mutual funds take. Over the course of a lifetime these fees add up. Couldn't it be better to invest that money on your own @TaeKimFinancialTortoise?
Your point for having cash for unexpected events like a broken tooth make no sense to me. I can use my credit card for that and pay it off with my next paycheck (which is thousands of dollars above my ordinary expenses). If the event is catastrophic I can just sell some stocks and have cash in my checking account within 1 business day. So what’s the point of holding cash again?
If you interview all the ultra high net worth people they will all say they got rich from maxing out their 401k and backdoor roths and saving taxes through 529.
Come on. This video has to be a joke. These are very basic flow chart.
If you are a high income earner you are likely working with more advanced strategies for tax optimization and investment vehicles that have a high financial barrier to entry that offer huge potential returns.
Great video. I'm surprised you dont mention crypto as one of the last options after doing everything else mentioned.
There’s a video about in eating vs real estate. And investing wins in the 5 year stretch. That being said, a good real estate strategy (like short term property rentals) could be a great way to reduce your taxable income, if you’re willing to put in the hours.
My employer match is my 401k Max
Thanks for this! You didn't mention IRAs in your order of investing. Where do these fall compared to Megabackdoor Roth for example?
Employer doesn't match 401k? Go it alone anyway.
You're the first person I've seen that agrees with the strategy my wife an dI use.
Remember if you really need strong health care benefits because you have a medical condition and your employer offers a regular PPO, non high deductible plan just get that and forego the HSA. While HSA savings accounts are super tax friendly don't second guess your health because you signed up for crappy insurance to get the HSA plan. Too many people are afraid to go to the doctor on these HDHP's because they don't know how much it will cost compared to a simple co-pay plan. You can't put a price on your health.
Please do a video on how to do backdoor Roth for someone who has a traditional IRA
define high income earner. Some folks online say minimum of 250k, but that doesn't seem like it's normalized for the entirety of the US. My TC is 141k and HHI is 223k, living in MCOL area of upstate New York. I don't know if I can even consider myself a high earner yet… certainly not with how the housing market makes me feel
This video should be REQUIRED with annual refreshers and a "must pass" Quiz in all curriculums 7th Grade through Doctorial Candidates😂
Please have a spotify podcast of these videos! Turn them to audio please
I would argue that paying off high interest debt would have priority over employer matching your 401k. You can have good and bad years with 401k investing, but the high interest debt will always be high interest so there would be greater savings in the long term by getting rid of it ASAP
I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.
You left out starting a business which would be legitimate diversification of income with high risk/return for younger investors. The problem with REITs is they trend mostly with the market with a slightly lower beta, so they don't diversify a portfolio much. RE is like a second job, you may as well work more hours at your current job and make more money.
Honestly, this concerns me and has left me uneasy. Especially this potential depression, no more a recession. I'm unsure about my $130K account strategy, considering the uncertainty of this whole recession mostly.
hi Tae! my wife does ESPP, so you think she should never hold it, and roll into S&P immediately? She has a lot of potential with her ESPP because of the explosive growth of Pharma. However, i know pharma is sketchy too.