Investing
Our topic for today is investing, but not like the super flashy, buy a crypto currency, and get rich overnight. BECAUSE THAT SHIT ISN’T REAL. I’m not talking about being as rich as Kim Kardashian or Taylor Swift. What is real is squirreling away little bits at a time for 30 years so you have some money when you are 59 1/2, and you don’t have to eat dog food when you are 70. That is a true story a friend told me about their grandma lying about not having enough funds for her retirement, and not having enough to eat. Don’t be #DFG (dog food grandma).
Why would I write about this on a pregnancy blog. Shouldn’t you worry about retirement after your children are out of the house? FUCK NO! Think about #DFG. You do not want your kids worrying about you right? Like they have all left the nest and have their own lives, but then you have to ask them for money after you retire. Looking after yourself is looking after them. Plus if you don’t use all of that money before you die, you can add that to their inheritance. The reason to worry about that right now, is the longer your money sits, the more money it accumulates.
So what the fuck is a 401k, or an IRA? Or a 403b, which is something I have never heard of that apparently my spouse has. The answer comes from a book I’ve recommended before, you guessed it, I Will Teach You to Be Rich by Ramit Sethi.
401k and 403b
Apparently these are named after like laws, or tax codes or some shit. Free Money for Retirement is what these should really be called. Then people might actually pay attention to it.
These are retirement accounts offered through your employer. Ask your HR department if your employer offers one. Your employer then offers a match % of your income. So my employer offers a 100% match of 3% of my income put into a 401k account, and 50% of 2%. That is kind of a lot of bullshit math, but if I were to contribute 5% of my income without a match, I would be giving $100 a month. With my employer match, that number goes up to $180. That is $80 a month of free money that goes into an investment retirement account! A 403b works exactly the same way, but it is only offered to individuals in certain areas, like public schools and non-profits.
What is really cool about this is you take this money out of your paycheck automatically. So you don’t even have to think about should I invest it or not. It just comes out ahead of time, like taxes. Speaking of taxes, you don’t have to pay any taxes on the money going in. Some non-retirement accounts take out a large portion of your deposits into your investment account. Not true with a 401k or 403b. You get to contribute that money tax-free. This does mean when you go to take it out, you will have to pay taxes on it, but because that money has been growing in the meantime, this is not as big of a deal. The other thing is right now you have to wait until you are 59 1/2 to withdraw that money. There are some exceptions like emergency medical expenses, but even then you will pay huge penalties and extra taxes. It is a good idea to hold onto it until you retire.
Roth IRA
I have no fucking clue where this got its name. My parents set one up for me years ago, and even then I didn’t know what it was except that the financial advisor lady told me I had to put $50 a month into it. Which I didn’t do for a while. Now I know a little better, but I still don’t know about the name. And I don’t know if my spouse benefits from this account or not…something to figure out.
Your employer is not involved in setting up a Roth IRA, you do that on your own. You don’t get any free money in the sense of employer matching. But it is still worth it. If you have credit card debt, worry about paying that off before you open a Roth IRA. Check out my post Making a Debt Repayment Plan if you aren’t sure how to do this. If you have paid off your debt and are ready to open this account, you are going to have to go to an investment company and open an investment brokerage account, and then open an IRA. My parents set one up through Edward Jones, and they seriously have been super helpful with all of my questions.
Once you have this set up, it is time to start contributing. I deposit 10% of my income into this account. Remember that 5% is already coming out of my paycheck to a 401k. So I am contributing a large amount of funds to retirement. But I do not want to be #DFG.
How about you, do you invest in retirement accounts? Do you have a 401k? Do you have a Roth IRA? Did you make a million dollars overnight in Doge coin and just needed to get on here to prove me wrong for some reason? We want to know, tell us in the comments below!