Jump to content
tony

How To Be Richer Than A Millionaire

Recommended Posts

2 hours ago, sschullo said:

So, if you take out the opportunity to save on taxes to put into a nest egg, of course, it will take many more years to get real money because your growth assumptions do not take into consideration the potential growth of tax-deferred money.

My spreadsheet takes into account the tax advantages of a Roth account, which provides year over year tax free growth.

Although I have always advocated for Traditional over Roth, I’ve heard many (including posters on this board) tell people to invest in a Roth instead of a Traditional. I view this decision to be an optimization, but I agree with what seems to be the general sentiment in this thread that Traditional is superior to Roth.

I did not model a Traditional account for the same reason I didn’t model a taxable account: the calculations would have been far more complex and the spreadsheet already took a bit of time to create.

...I encourage anybody to model the effects of using a Traditional account. More than that, I encourage you to model the effects of using a taxable account when you surpass the Traditional limits.

...I also gave the hypothetical investor the advantage of investing in funds that charge 0% expense ratios. I really tried to give the hypothetical investor lots of tailwinds with my model...I just refused to do that when it added complexity to the model.

Share this post


Link to post
Share on other sites

Ed, nice work on your spreadsheet. I realize you based your data on a single person  however it is noteworthy to point out that the household income is considerably higher, according to the US Bureau of Census. 

Steve, you're probably the only person I know who sees your wealth after taxes are paid! - kudos to you, a shrewd man indeed. That is probably why the FI peeps resonate with you so much- they take taxes into account and strategize ways to reduce their income to just below the taxable amount. They understand it really well.

Share this post


Link to post
Share on other sites
28 minutes ago, MoeMoney said:

Ed, nice work on your spreadsheet. I realize you based your data on a single person  however it is noteworthy to point out that the household income is considerably higher, according to the US Bureau of Census. 

In 2016 the median household income was 59k.

Whether it is done through roommates, family, or significant others...IMO, the best thing we can do for our finances is to fill as many rooms as possible with people who contribute to housing expenses.

That actually reminds me of my childhood when that opinion was first formed. I grew up in Coral Springs (Ft Lauderdale area) and I lived one street away from a good sized community of black/Haitian folks. I remember white people would always look down on them and make snide/racist comments referencing the number of people that occupied each residence. I was amazed by the pride/racism that prevented these white folks from shutting up, listening, and learning because the blueprint was right in front of them (even though the residents probably didn’t have much choice).

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×