How to talk to my boyfriend about putting more investments in IRAs

[dizzy]

So my bf and I are sharing more info about each other as we move into a life together. 
Right now his net worth is ~$220k I believe (couple of his stocks shot up this week)

He has ~$240k as of this morning in 5 stocks- mostly in 5 stocks (AAPL, NK, GILD, and 2 others I forget) and maybe $8k in some sort of mutual funds/ETF like VTI or something from his old job he quit in Feb.  He's unemployed right now btw has been looking for a job for months.  He is doing deliveries right now so technically self-employed.

He still owes ~$30k on mortgage I believe (can't remember if it's $25k or $30k).

He has a mindset of if money is in the retirement accounts it's harder for him to get it out in case of emergency (yes, he does have an emergency fund that is separate than this).  My mindset is that he is paying a whole lot more taxes than he needs to and it will take longer to (possibly Lean) FIRE which he is interested in.  I tried to explain a lil about backdoor Roth and eyes glaze over.

What's a good way or some resources to explain why this is in his favor and goal of ultimately retiring or working less?

[MDM]

Roth IRA contributions may be withdrawn at any time, for any reason, without any tax consequences: see Roth IRA as an emergency fund - Bogleheads if that might be useful.

Getting started - Bogleheads is a good place for anyone to get started.
Investment Order has some suggestions applicable to most.

[MustacheAndaHalf]

It sounds like your boyfriend is gambling.  Of the 3 stocks you recall, 2 are health care companies - he's not even diversifying across parts of the market.  He probably has another tech company, too.

You might want to read up on gambling, and ask yourself how pervasive it is in his life.  Is he taking the risky approach instead of the responsible one?  Emergency funds are measured in terms of monthly expenses.  With no income, how many months would the emergency fund last?  If it's a really small number (2-3 months), that seems irresponsible for someone without a job (non-gig job) and uncertainty when hiring picks up again.

You could also read up on diversification, and why total stock market and total international should be the core of someone's retirement portfolio.  (He doesn't like retirement portfolios... because he can't spend the money from them?  That just struck me as weird.  Retirement portfolios are saving for the future)  I'd say there's a decent chance the problem isn't his lack of knowledge of diversification, but that he doesn't see himself as gambling.

[nereo]

Regarding taxes, what matters most is how much he earns (i.e. salary and wages) each year.  Given the NW you quoted I assume he has a high(ish) salary, which makes it all the more advantageous to use tax-advantaged buckets first (IRAs, 401(k), HSA, etc).

As for his total NW, I’m guessing it’s higher than you mentioned if he has $240k in 5 stocks and about $30k left on the mortgage.  Traditionally you also include the equity in your home, and you would definitely include e-funds and cash on hand.  Not that it matters a great deal here but knowing this might shed more light onto his approach.  Already there are some red flags about his approaches (owning just five stocks across two industries). 

In terms of getting him to contribute more towards his tax-advantaged accounts, what works for most people is to show them how much more money they could have utilizing them than not.  Mad Fientist has some great graphics showing how much extra money one can have by contributing to these accounts (in most cases it’s well north of $100k).
For others, it’s enough to simply show them how much less they could pay in taxes THIS YEAR and ignore the whole tax-free growth argument entirely.  IT can be as simply as “hey, for every $1,000 you put into your tIRA you will get $240 back when you file your taxes.  That’s $1,440 if you contribute “just” $6k this year”

G’luck.

[dizzy]

Whoops, yeah.  He did say his net worth was $220k but yeah he didn't include the equity in his mortgage.
His house was $130k when he bought it but the value has since gone down to $110-115k (it's pretty small @650 sq ft and not most desirable area, it's just ok).  I don't know if he should count that or not tho.  Something I've never had to worry about?  eeeee.  He has paid ~$100k of the $130k.


He is similar to me in that he didn't know anything about saving for retirement until late 30s either.  Then just put his savings (he HAD been saving at least) into the stocks.
I guess he just has this huge distrust in the government.  Like if it's in the ira account somehow he thinks they might take it, or if something "crazy" happened he would be able to get it out of a taxable account faster than if it was in a IRA.  It's hard to understand exactly what this means- I'm like hip to conspiracy theories and whatever even, but if something really hit the fan, I kinda don't think it would matter?

He does have some of the stocks in Roth accounts I believe. But he wouldn't match or contribute to the 401k at his company, it wasn't required for them to dump money in his account. 

I like your ideas nereo and will try to talk to him that way.  I don't really see him as a gambler- he lives a quite frugal life tbh.  $2k/mo expenses and working on getting that down (so far we've got him down almost $300 a month between my rent contribution, different phone plan, and reduced internet bill).  I think he knows he should or will get into a more conservative approach eventually, he did almost sell some or all of NK this week and considered dumping it into VTI or something.  I guess he likes idea of "owning" a company he believes in.

[draco44]

he wouldn't match or contribute to the 401k at his company, it wasn't required for them to dump money in his account. 

One quick point not yet discussed: if he's not putting enough into his company's investment plan to have his employer match contributions, he is missing out on free money.

*EDIT: I missed in your original post that he is currently unemployed. He should keep this point in mind for his next job, however.

[MustacheAndaHalf]

...  I don't really see him as a gambler- he lives a quite frugal life tbh.  $2k/mo expenses and working on getting that down (so far we've got him down almost $300 a month between my rent contribution, different phone plan, and reduced internet bill).  I think he knows he should or will get into a more conservative approach eventually, he did almost sell some or all of NK this week and considered dumping it into VTI or something.  I guess he likes idea of "owning" a company he believes in.

Wow, his avoidance of retirement accounts was a conspiracy thing?  I'd never heard of that, how confusing.

I also want to reverse my advice to buy total stock market in these next few weeks.  I'm market timing based on predicting that COVID-19 is about to strike back, which you can probably see from the news stories.  There's a reason NY,NJ,CN now require people from 8 other states to quarantine.  Until this next outbreak hits, I'm waiting to buy, and so I can't recommend someone else go 100% in right now.

During a COVID-19 outbreak, tech and health care are actually decent things to own.  That's the other reason I can't recommend the switch - he could get really mad about it!  But over time, it might be worth convincing him to diversify into the entire tech sector, like with the Nasdaq-100 (QQQ)... or into the health care sector with iShares Health Care (XLV).  Both of those have dozens of companies, but all focused in the areas he seems to trust.

[talltexan]

I use my retirement accounts, but I can see why someone might mistrust the government based on how things are going lately. Does your BF have a historical example of behavior he cites to support this belief of his that gov't will just take everyone's Roth IRA money?