Author Topic: Mustachian Investing for Dummies - AKA I got's some questions.  (Read 2159 times)

aarivers

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Current financial situation.

I'm making $52K a year before tax, my wife is making right at $100k a year. I want to totally invest her salary as $52K is more than enough for us to like off of even with me maxing out my 401k. My problem is, I don't know where to start. Should I just dump all the money that's not going into her 401k into Vanguard ETF's? Should I take a percentage and place it in a regular savings account? Help me Obi-Wan-Mustacians, you're my only hope.

Thanks!

matchewed

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Re: Mustachian Investing for Dummies - AKA I got's some questions.
« Reply #1 on: April 16, 2015, 07:21:47 AM »
IPS

Be tax efficient and invest according to your Investment Policy Statement (link above).

Utilize as much tax advantaged investing that you can between maxing 401k's for the both of you and any IRA/Roth IRA availability (IRA is often better but you have to run the numbers). If you're filing taxes together then treat the income as a single pool for the purposes of evaluating the numbers.

As for savings versus investing after all that is done? Well that depends on whether you have an emergency fund, need one in savings, and the rest of your overall financial goals.

velocistar237

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Re: Mustachian Investing for Dummies - AKA I got's some questions.
« Reply #2 on: April 16, 2015, 07:22:08 AM »
Max out all pre-tax accounts. You should each be able to put the full amount into Traditional IRAs in addition to 401ks. That's $5500 each.

Open a Vanguard Traditional IRA (the one for you and the one for her will need to be under different logins, I think) and a Vanguard taxable account (assuming you like Vanguard). If you're sure you'll get the full IRA deduction (you should, at least, but maybe not her), then fill up the IRA before putting money in the taxable account. At some set time interval, transfer the excess money out of your checking account and into Vanguard.

If you're unsure about whether your wife will exceed the income threshold for reducing IRA deductions (e.g., she could get a bonus), then just make a partial contribution as early as possible and make sure you have the cash to top off her IRA come early next year, once you know her income for the year.

You can set up the accounts and transfer money in without knowing an asset allocation (the money can start in a settlement fund, which is usually a money market fund), but you'll need to decide on an asset allocation at some point. The Boglehead wiki is useful for that. You could keep it simple and do a three-fund portfolio. Pay attention to tax efficiency and put all bond and/or real estate, etc., funds in the 401k or IRA accounts. Pay attention to the fees between your 401k and IRA accounts when choosing where to put money. As you make more deposits, try to maintain your asset allocation.

You can invest in ETFs or mutual funds from within the same Vanguard account (Vanguard recently merged brokerage and mutual fund accounts). If you buy and hold a significant amount of money, it doesn't really matter which one you do.

Don't let the details slow you down. Opening the accounts and putting all the money into a total stock index would not be a bad decision. You can figure out asset allocation and tax efficiency and slowly shift toward that with new deposits later.

marty998

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Re: Mustachian Investing for Dummies - AKA I got's some questions.
« Reply #3 on: April 16, 2015, 07:44:33 AM »
Current financial situation.

I'm making $52K a year before tax, my wife is making right at $100k a year. I want to totally invest her salary as $52K is more than enough for us to like off of even with me maxing out my 401k. My problem is, I don't know where to start. Should I just dump all the money that's not going into her 401k into Vanguard ETF's? Should I take a percentage and place it in a regular savings account? Help me Obi-Wan-Mustacians, you're my only hope.

Thanks!

Have you asked your wife what she wants?

Said from the perspective that we've probably contributed to f'ing up a few marriages over the years by providing unrequited advice....

Doulos

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Re: Mustachian Investing for Dummies - AKA I got's some questions.
« Reply #4 on: April 16, 2015, 01:08:37 PM »
I agree with marty here.
It is more important that your wife is on board with "us" decisions than it us to help with your "I" decisions.
Marriage relationship >> Investment decisions.

Get a budget ready and make sure her input is sought before she even sees it.  Then demand that she make some changes to make sure she is involved.  And be happy about those changes with her.  Maybe she wants some extra entertainment money taking your $25k to a $30k budget.  Dont panic.

Just saying there is a lot of "I" talk in your statements here, not a lot of "We" talk.  Try starting over again with "We make $152k a year before tax...  We agreed to live off of $[20,30,42]k and invest the rest.".