frozenwaffle549 t1_jeggp1o wrote on March 31, 2023 at 8:57 PM

Reply to comment by lions239 in I'm 23yo kicking of my financial journey, any advice? by lions239

I can see why you think comparing the bottom number is the same, but it's not comparing apples to apples. There are a lot of hidden costs the owner bears.

You may be looking at a time horizon that is too small. At .55% you might as well keep it under your mattress lol, but a quick search says the "American Funds 2060 Trgt Date Retire R6" over the last 5 years has returned 14.89%. I would suggest you open an account with vanguard and get a target date fund from them (VTTSX) and pay lower in fees (0.43 VS .08%) also read the book " I will teach you to be rich" by Ramit Sethi.

lions239 OP t1_jegiuz5 wrote on March 31, 2023 at 9:12 PM

Oh yeah the time horizon is just the over the amount of time I've had the 401k, so about a year and a half. Thanks for the book rec, I'll check it out!

As for the other rec, would one of the ways I would accomplish this is by reducing my Roth 401k contribution to the company match and then using that money? What kind of "account" do I open with them? Is that what a Roth IRA would be or this is something different?

Also, for my federal student loans, should I just pay those off monthly once it resumes? Any reason to explore just paying them all off at once right now?

frozenwaffle549 t1_jeglikn wrote on March 31, 2023 at 9:30 PM

When you read the book it will explain it in more detail but yes. The Roth 401k option is an employer-sponsored retirement account and the Roth IRA as the name suggest is an Individual Retirement Account.

Again, I would recommend reading the book first but yes you would open an account with them that is an IRA, not the brokerage one. Then use the money you have to max it or at least work up to a goal of a total of 15-20% of your gross salary.

As for the student loans technically you are legally and morally obligated to repay the loans but politics being politics I would hate for you to be holding the bag when the president wipes away student debt in order to buy votes. So I would set aside just enough to pay it in full and see which way the wind will blow on that decision. (My money is on its not happening)

lions239 OP t1_jegnasw wrote on March 31, 2023 at 9:42 PM

Awesome, thanks for all the insight.

I doubt anything will actually be canceled, I don't expect it to be. So I guess when the time comes where no more pauses or cancellations are in sight, then I will just pay it off in one time with what I set aside to avoid the interest.

Last question, I know this is discussed a lot and I've been reading here and online, but in the short term, my first course of action will be to open a HYSA. Any advice there? I've gathered that Ally, Capital One, Discover seem to be the most popular even if there are others with higher rates, but these seem to be the ones people stick to since the rates are "safer" and won't decrease as much as others may. Is this the route I should go?

After reading a bit more, perhaps I should consider Ally's No Penalty CD... and maybe do ~65k of my ~74k?

frozenwaffle549 t1_jegstqc wrote on March 31, 2023 at 10:22 PM

HYSA doesn’t matter who you go with. The purpose of the account is to play defensive and be liquid. If you want lock up your money that’s fine but if you are spending time making a decision between like 4.5% and 4.75%. Then you are wasting your time and thinking too small.