Author Topic: Brokerage account the best place for my money?  (Read 1940 times)

Mr. Green

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Brokerage account the best place for my money?
« on: December 29, 2014, 08:37:33 AM »
I believe I have reached the point where I should be putting any more money in our 401ks. My wife and I are comfortable living on $40,000 in retirement, I use $60,000 as the bar so there's lots of flexibility for travel or whatever. Based on the combined amount in our 401ks already, earning a 6% return after inflation until retirement and 3% after retirement, we would be able to draw roughly $120,000 a year starting at 60 with the funds being exhausted in our mid-90's. So I feel pretty confident that even if our returns were less than that we wouldn't have a problem meeting our income needs.

I'm at my job for 18 more months, during which time we'll be cashflow positive $110,000 per year. A small amount of that money is earmarked for other investment vehicles but the majority of it I want to put into a vehicle to be drawn upon in the years leading up to 60, when we can't withdraw funds from our 401ks without penalty. I'm 31 now, so the money will have 15-20 years to grow.  I have a Vanguard brokerage account but our Federal income tax rate is 28%, plus state taxes, medicare, etc. My question is, are there any investment vehicles that would allow us to avoid such a big tax bite now but still withdraw funds later without an age restriction? Or is a brokerage account really the best vehicle at this point and paying the tax man just the price of not needing to put more money in 401ks?

MDM

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Re: Brokerage account the best place for my money?
« Reply #1 on: December 29, 2014, 10:19:52 AM »
I believe I have reached the point where I should be putting any more money in our 401ks.
...
My question is, are there any investment vehicles that would allow us to avoid such a big tax bite now but still withdraw funds later without an age restriction? Or is a brokerage account really the best vehicle at this point and paying the tax man just the price of not needing to put more money in 401ks?

Your subconscious is telling you the right answer - yes, you should keep putting into the 401k. ;)

E.g., see http://www.madfientist.com/retire-even-earlier/ for answers to your questions.


Mr. Green

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Re: Brokerage account the best place for my money?
« Reply #2 on: December 29, 2014, 08:23:55 PM »
My mind has been blown, multiples times over. I thought I was a pretty smart guy when it comes to money but a whole new world has been opened up to me. Thank you!

arebelspy

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Re: Brokerage account the best place for my money?
« Reply #3 on: January 01, 2015, 12:22:33 PM »
My mind has been blown, multiples times over. I thought I was a pretty smart guy when it comes to money but a whole new world has been opened up to me. Thank you!

I love seeing things like this.  :)

Congrats on what you have accomplished so far!
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

chasesfish

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Re: Brokerage account the best place for my money?
« Reply #4 on: January 01, 2015, 01:30:19 PM »
I'm going to second the other recommendation, just put your $17,500/year in the 401k then invest the difference.