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Author: padend Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: What if I think I can retire WAY before I'm 59? Date: 3/27/2001 12:28 PM
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I know IRAs are good. I know 401Ks are good. But they don't let me at my money until I'm, well...old. I am 21 now, and I am making a considerably large salary for my age. Where should I put my money so that it will get good returns AND be available when I'm say 40 or 50? I think this requires a completely different strategy than traditional retirement planning, and I don't want to screw it up. :) Any ideas or resources for this type of investing? Thanks!
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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28669 of 76418
Subject: Re: What if I think I can retire WAY before I'm Date: 3/27/2001 12:50 PM
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I know IRAs are good. I know 401Ks are good. But they don't let me at my money
until I'm, well...old. I am 21 now, and I am making a considerably large salary for my
age. Where should I put my money so that it will get good returns AND be available
when I'm say 40 or 50? I think this requires a completely different strategy than
traditional retirement planning, and I don't want to screw it up. :) Any ideas or resources
for this type of investing? Thanks!


I would max out the Roth.
Probably the 401k.
You can retire and take the money out without penality before 55/59 1/2. Lots of posts on early withdrawls so do some searching of the boards.

Also, you will be retired after 59 1/2 and could use the retirement money then. Use taxable investments before that age.

You can use both taxabel and tax deferred investments but you are correct that there is a mix.

Remember the 401k is taxed at your regular income tax rate and the taxable investments will be taxed at 18 oe 20%.

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28672 of 76418
Subject: Re: What if I think I can retire WAY before I'm Date: 3/27/2001 1:19 PM
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padend: "I know IRAs are good. I know 401Ks are good. But they don't let me at my money until I'm, well...old. I am 21 now, and I am making a considerably large salary for my age. Where should I put my money so that it will get good returns AND be available when I'm say 40 or 50? I think this requires a completely different strategy than traditional retirement planning, and I don't want to screw it up. :) Any ideas or resources for this type of investing? Thanks!"

As rjm1 said, SEPPs can make the retirement money available before age 59 1/2 without penalty.

Get thee to the Retire Early board here in TMF (in Speakers' Corner) and also look at the Retire Early Home Page maintained by "intercst" --- the URL is linked from the Retire Early board (or at http://www.geocities.com/WallStreet/8257/reindex.html
or
http://www.retireearlyhomepage.com/ )! Lots of good reading material for you - especially in the earlier days of the board.

If you intend to retire early, then you will likely be saving more annually than permitted by the IRA and 401-k rules; probably a taxable account with LTBH stocks with low or minimal dividends or a tax managed mutual fund (terminology might be off slightly, but there are mutual funds that are managed to minimize taxes from annual distributions).

Regards, JAFO

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Author: jbking Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28673 of 76418
Subject: Re: What if I think I can retire WAY before I'm Date: 3/27/2001 1:22 PM
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Try this link: http://boards.fool.com/Message.asp?mid=14489596 for a wealth of information since I HIGHLY doubt you have considered that if you max out the 401k and Roth that this wouldn't be enough in 19 years of contributions to retire on for 40 years unless you are really drastic in some things. Also, remember that if you retire at 40 you'd have to have your portfolio produce income for 40 years or more as life expectancy is near there. (Picture retiring in 1960 and living to today to get an idea of all the ups and downs you'd experience in 1 case.)

JB

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Author: tsouth Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28674 of 76418
Subject: Re: What if I think I can retire WAY before I'm Date: 3/27/2001 4:14 PM
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DH and I are planning to retire in our early 50s. We started by maxing out the 401ks, then added the Roth IRAs, and this year will begin the taxable Mutual Funds (which will be held long term).

The 401ks assure that we will be able to retire at a traditional retirement age. The Roths allow for withdrawal of contributions before 59.5. And the taxable accounts will be used BEFORE 59.5.

We're also paying down/off our debt so that we have more money in the future for investments. And are aiming to have our home paid off before we both go for an early retirement in order to lower our monthly expenses.

Don't forget to enjoy some of your money while you are young!

Teresa

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Author: TTRoberts Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28681 of 76418
Subject: Re: What if I think I can retire WAY before I'm Date: 3/27/2001 5:01 PM
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padend, you asked:

<< I know IRAs are good. I know 401Ks are good. But they don't let me at my money until I'm, well...old. I am 21 now, and I am making a considerably large salary for my age. Where should I put my money so that it will get good returns AND be available when I'm say 40 or 50? I think this requires a completely different strategy than traditional retirement planning, and I don't want to screw it up. :) Any ideas or resources for this type of investing? >>

Hmmmmm?? Concerned about not being able to get at it until your "old" (old = 59 1/2?). If you feel THAT's "old", then just wait until you're 90 (which there's a very high probability in this day and age). <grin> Actually, I'm making a point here in that if you were to retire, way between age 40 and 50 you're very likely to live for a VERY long time yet and you need to make plans accordingly. Though it may be a hard thing for you to do at your age (as it most commonly is), setting out a good long term financial plan would be a good place to start BEFORE you decide just what to invest in and how. So, you might want to read a couple of good personal financial planning books (not how to get rich or how to invest in stock market or anything like that - personal financial planning is really much more comprehensive than that).

By putting together a good financial plan, you'll have a specific directions you'll be heading and know how of invest to achieve the various SPECIFIC goals within that plan. It will then be easier to decide on just where and how to invest . . .and just how to just up your total investment plan to meet YOUR specific goals and objectives. You'll want diversification. You'll want some liquidity. You'll want the benefit and efficiency of tax deferred growth. You'll want short term and long term investment positions. You'll want an Emergency Fund to start with. Just remember that life does change things over time so your financial plan will NOT be set in stone and needs to me modified accordingly.

In a forum like this, which is focused on traditional “investing” in the stock market, you're not going to hear much about alternative investing. For example, you might want to invest in real estate as PART of your overall plan. You might also have an particular interest where you can invest in a business of your own. Just where to invest, how and when, etc., depends a long on you . . . your goals and objectives, you're personal interests . . . even YOUR personal philosophical views.

Now you can choose to do things well or just do things simply. If you really like thing to be very simple . . .just invest in something like Vanguards Index 500 and to heck with what anyone else may think. <VBG> ;-)


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