Financial independence advice @23
Trying to reach FIRE, want to get some advice from ppl who are further along the way to make sure I’m not making mistakes and am able to optimize my journey better. NW: 64k Stocks: 39k (tech, treasury bond, crypto, etc) HYSA: 51k (leverage for student debt) Student debt (all under 3% APR): 32k Bank accounts/ Venmo/ cash: 6k TC 80k base, 6k sign on, 6k ote bonus 23 yrs old, 1 yoe Monthly: Pretax Income: 6666 3000 paycheck - 1000 Rent/transportation - 1000 discretionary spending (including food) - 1000 HYSA 1000 company stock (ESPP) 1000 401k (1/3 401k, 2/3 401k Roth) 1500 tax 166 insurance Just started putting money in company 401k, and thought 401k Roth was same thing as Roth IRA, but someone else is saying IRA is better to max out. Deciding if I should shift that. Also working on side hustle, very entrepreneurial and had several attempts at business ventures in the past, made 3k last month but not sure if sustainable or if it will continue or end. (Tend to reinvest $ into businesses and sometimes it doesn’t pan out) (saw 300k revenue within last 5 years across all business ideas but no net profit). Considered buying a property and house hacking, but house prices around my area are $1M+, also base rent is only 800/month sharing w 3 roommates so not bad. Aggressive goal was to try to hit 100k nw by end of year, and 1M by end of next, if my business takes off, but also want to do conservative estimates. That would be just what I’m shooting for so I keep it going, more realistically is to hit 70k nw end of this year, and 150k end of next. Thoughts? WWYD? Is it realistic for me to hit 1 mil by 30 realistically? Also trying to figure out if my focus should be more to grow in the company or on side business. #personalfinance #investments #financialindependence #fire #money #entrepreneurship #tc
At this stage just focus on increasing your TC by learning
I am learning, mainly trying to see if focusing on growing TC in corporate vs the side hustle pays off more
At your current TC and assuming let's say a 30% savings rate, 7% annual growth rate across your investments, continued monthly contributions, etc.. no you won't get to 1mm NW by 30. But, 100k NW may be possible with luck and diligent savings. Really depends on how much growth your side hustle can do. I don't see any expense towards growing the business so I'm going to assume it's just your opportunity cost of time vs doing something else with your time. I also don't see any mentions of travel spend, etc. At 23, I'd focus on upskilling as much as possible and looking to grow your TC within the company or possibly elsewhere. Growing your business has to be viable for you to consider spending time there or at the least enough to generate passive income. Re: 401k.... I'd put money in either Roth 401k (post tax) or 401k traditional (pretax) and not both. Given your income bracket, may make sense to do roth 401k now then shift with new money to 401k (pretax) later on once your income tax bracket rises. Also roth IRA is separate and you should consider one regardless of pre/post tax 401k.
Current TC being 90-130k (depending on side hustle), expecting it to grow also. Side hustle is mostly time invested, I do not travel, and live frugally (under $2k a month total cost of living including rent food and expenditures) and have ~80% savings rate Trying to upskill within company, main thing is what do I invest in time/effort wise and savings wise.
Yes, you could reach 1 million or be pretty close if you house hack and save like crazy.
I will say the same thing that any good financial advisor with a CPA would say. 1) Contribute to 401k and get all company match. 2) 3 to 6 months emergency funds on a HYSA account. (Based on your risk tolerance) 3) Roth IRA (max out 6.5k) you can manage your own account from brokerages like Fidelity. You don’t need 401k Roth. I like Roth IRA because it’s a tax free growth account which means you don’t pay a penny when you retire. 4) Max out on 401k. 5) if you are young and healthy, go for high deductible healthcare plan with HSA max out. HSA has crazy tax advantage and you can later move it to IRA. Hope your company contributes to it as well. 6) Traditional IRA max out. 7) If you have excess cash, contribute to backdoor Roth. 8) if you still have excessive cash, you can contribute to your brokerage account (split between VTI/VXUS/SGOV etc). 9) you may consider taking a term insurance (20 to 30 years). This is not an investment but if you die god forbid, you leave something for your loved once. This is optional and I would highly recommend for single earning breadwinners. That’s pretty much it. Good old school way of thinking about retirement. You should mostly automate everything and focus most of your energy on career growth, personal development, workout etc.,
If you have high interest debt like credit card, pay it off first before contributing to brokerage account/backdoor Roth etc.,
You may also consider Robinhood IRA account, they provide 3% free match. This means you get 200 free match per year. As a rule of thumb, you should jump on any free matches.
Better paying job should be your #1 priority
leetcode dot com
You just started your career, my advice to you is to focus on learning and growth than retirement
I want the prestige. I don’t intend on retiring once I reach the number, just want the financial freedom part asap