DON, Tracy, Tehran discussed on Talking Real Money with Don McDonald and Tom Cock
In real huge. And Don are talking. Real money. Really important thing for your really really great future that you're gonna have. And it's a lot easier to manage than you probably think because people try to make it seem too complicated. Give us a call. We'll simplify it at eight five five nine three five talk. Eight five five nine three five eighty two fifty five and back to the phones we go, Tracy. Welcome to the show. I have a question for my daughter who's nineteen nineteen in vain. Non retirement day. But she hasn't. Any particular time? Yes. Good. Which may be long term or maybe like six years. Down. Larry. Yes. See that. There's the there's the rub is this long term. Or is it six year? What's your bet? Don't know. She's trying to save the money. Plan. Extra. Hopefully, it would be long term. But I'm here. House. David he'll probably go into it would be my guess how much money. Only a couple of thousands. More than you. Well, well, well, well that six year thing Jorda throws a wrench into the mix. But here's what I would do because you can sorta go long term and sorta sorta go short term with a really really really super simple portfolio. And because she's got the potential of that six year timeframe, she's going to have to keep some powder drier to reduce the volatility, but I don't know because of her age that it has to be particularly large. So I. What do you think I'm thinking like sixty percent? In the global WS X. I'm thinking, I know this is a split between two funds. I think she should just own the vanguard balanced fund. You think it's? I know you don't get as much diversification. But it's one fund when you're nineteen. I'm worried that it gets confusing balanced indexed. Yeah, you're probably and then it just goes in the the risk of loss in that probably somewhere between twenty five and thirty percent in one year. And you probably got a shot at making five or six percent. Let's see if we can get the ticker here for you. That's what I'm trying to do. Yeah. It's it is VP visa and victory is in. Boy. I. And ex N as in Nancy X as in xenophobic v Negga, simpler approach I just think I think if you start telling him by sixty percent forty percent, then Gracie gets complicated is she is she doing acorns. What she should be. So he actually is doing maxing out here. VIP gay. Doing thirty. Doing really good. Wow. Down payment on the house with the reason I say that is if she did something like an acorns later, a Roth through acorns, she could just take take little bits of a like a small monthly amount that she doesn't use and all the change the it'll round up all of her purchases and put that additionally away for retirement and starting at nineteen. Wow. Retire. She gets she's to be able to retire. Here's what I would do. Then with that in mind. I think that's pretty good advice. Number one at the vanguard. She should on the I n x vanguard balanced index fund. That's going to give you some stocks dumb some bond exposure again in the absolute worst case it could lose twenty five thirty percent of its value. Then I love with Don just said because if you're doing the VIP, that's probably pre-tax she could do she could go to acorns. It's because she's nineteen. She'll get this set up. A what are they called acorns acorns later later, and that's a riot. Yes. So now, she has money she saved, and it doesn't have to be very much. She could just put whatever as Don said, you could set up the roundup to be very small, but you throw into money at after-tax. So now, you've got pre-tax savings. You have savings for your house or whatever comes along and you have after tax savings. I the acorns later be very aggressive. They haven't portfolio that we really think a lot of. I mean, it's not it's not exactly what we would do. But it's so similar that we really like it. And and the folks at acorns, if you're listening, you guys could like, you know, participate give us a little monitor. We've never got. Acorns is really great because the costs are low. It's an automatic. There's no discipline. She never asked to write a check to them the millennials. Simply comes this daughter is discipline. I mean at nineteen putting all that in your VIP is fan. Save anything at night. Hard. No, that's great. On here. Already max out the rod. Going in. Oh, she's maxing a Roth four oh one. But you could still do the Roth IRA you can do both. Yeah. Yep. I thought you're only limited to what six thousand five hundred or something. Yeah. That's six six thousand. I forget they just upped it for twenty inches. The age of fifty I think it is six and then if you're fifty or older you could do seven in two thousand nineteen twenty nineteen limit is six she could do six thousand there. No, no, no. But the limit is six in the Roth IRA nothing to do with the guy that has nothing to do with the Roth 4._0._1._K those are separate. Oh, I see. Okay. Be rich rich rich rich is the max for the 4._0._1._K contributions in twenty nineteen under the age of fifty. I forget they think they raised it. And I think they did raise the limit. And they raise evidence you nineteen. Wow. So you could put old lot into that you could do both. And then she has twenty five thousand a year. She does that for about ten years and doesn't do anything. More still going to be a great shape because you're going to get thirty years of growth on all that money. So congratulations tracie, obviously trained her. Well, wait, she had another question. Go ahead real quick. So we didn't we thought it was a six thousand max on the rock. So is it better that she puts, but nineteen thousand everything in the ID into the Roth if she can afford it from taxation standpoint. Absolutely. Yeah. Yeah. Yeah. Absolutely. Converted all Tehran. Well, no leibels leave leave alone. What is already in the pre-tax? It gives you a little more flexibility. But her future contributions if I was making these at nineteen. Yup. My future contributions would be going one hundred percent of the Roth 4._0._1._K, and then my IRA would-be one hundred percent Roth IRA because then when she gets to retirement there is no mandatory distribution. And the other nice thing is you could pass it to heirs tax free, and you can take it out tax free. Remember, everything pre-tax you're gonna pay tax on it and ordinary income tax rate completely different ball. I mean. Wow. You're you're you're you're daughter Tracy will be in a great spot forty years down the road. So great question. Go yell. I gotta go yell at all my children now..