Not sure what to prioritize at 28!

Submitted by fduerr t3_11doh7k in personalfinance

My girlfriends and I are all around 28 and financially independent. We have strong emergency funds, basic investments, retirement funds, low debt, etc.. Recently, we started getting together once a month to discuss how we can step up our personal finance. We were asked to set goals for ourselves and I'm feeling a bit lost. I am extremely grateful to be where I am at financially but how do I take it to the next level? I definitely want to invest more and strategize how to maximize my investments.

The logical next steps seems like real estate, but we all live in very high cost of living cities. We value living in these places and don't want to move just so we can buy real estate. Real estate feels unachievable given how expensive homes/condos are in our cities. What would you prioritize if you were in my position?

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Werewolfdad t1_ja9umat wrote

Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics

For many people there is no next level. You just do more of what you’re already doing.

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fduerr OP t1_ja9uyr5 wrote

appreciate it!

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AdditionalAttorney t1_jaag5h7 wrote

I recommend the above guide as well.

Just sit tight, be consistent, and in 10,15,20 years you’ll see where you are.

Investing is boring.

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greyAbbot t1_ja9wl1j wrote

Real estate can be a great part of a good financial life plan, but it will only make your life better if you actually want to live somewhere that affordable real estate exists, and you are okay with (or even like) taking care of a house or condo and possibly a yard. And also if you are sure enough that you want to live there for at least 5 years, which is about the minimum time you can own real estate that you would come out ahead financially if you decided to sell.

If owning a home or condo doesn't seem like something you'd actually enjoy, at least for now, then it's unlikely to improve your quality of life to buy it anyway because you think you are supposed to.

Just be aware that one of the reasons people who own real estate tend to come out ahead is that a mortgage acts as a kind of "forced savings" because you are building equity over time, and later in life you can pay off your house and lower your expenses, or even sell and downsize to get cash. So if you decide owning real estate doesn't fit your lifestyle, you can still have a great life but just be aware that sufficient retirement savings are even more critical because you need to plan for paying rent throughout your life.

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SpiritualCatch6757 t1_ja9xdc3 wrote

The logical steps for me is:

401k match Max HSA Max Roth IRA Max 401k Max Mega Backdoor Roth IRA

Real estate isn't even in the picture.

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matto_2008 t1_ja9zqus wrote

This is exactly what I follow but no matter what I read I cannot figure out the mega back door….

Having a 90k salary there isn’t a ton to spare after maxing 401k, Roth IRA and HSA though.

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AdditionalAttorney t1_jaag7z3 wrote

Does your company offer a mega back door?

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matto_2008 t1_jaazfoz wrote

I’m not actually sure how to ask or how to tell?

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AdditionalAttorney t1_jab25d1 wrote

“Hi do we have access to an after tax 401k, sometimes called the mega back door Roth?”

But is that the step you’re on based on the flow chart?

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Gwsb1 t1_ja9y97e wrote

When you say "real estate" do you mean to live in or invest in?

If to live in that is tough in high COL areas. To invest in that can be easier because it doesn't have to be where you are.

Example: go in with your friends on a vacation condo to rent and visit. Hire a local RE company to rent and manage it.

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fduerr OP t1_jaa2ek8 wrote

I was thinking to live in, but I guess I could invest in a vacation condo. Mostly where I want to vacation is international or also in high COL areas.

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Gwsb1 t1_jaa96ws wrote

😆 I feel your pain . I also have a champagne taste and a beer budget. And of course you don't have to live where your real estate is. But a duplex and hire someone to rent and take care of it. Doesn't have to be vacation property.

And another option is go in with your friends on a place to live. That one gets tricky of course.

And as one person said , just keep doing what you are doing , but at a higher level. Keep saving investing in stocks. Compounding is very powerful.

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AdditionalAttorney t1_jaagfko wrote

Make sure you REALLY understand the numbers if you’re going to go the real estate route.

And make sure you have a very detailed agreement and a stomach to enforce it if it’s something you’re going to do w friends

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Stock-Freedom t1_jaa33dp wrote

Follow the flowchart.

My generic advice:

https://i.imgur.com/lSoUQr2.png

Here is the flowchart from the r/personalfinance subreddit’s Prime Directive. If you follow that, you will be ahead of almost all of your peers.

Stop by the sidebar to see the Common Topics, which include basic money handling and investing.

You don’t need to talk to anyone or buy some random book to do this. You have all the tools right here.

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ChemtrailDreams t1_jaapgya wrote

Just a heads up, I know what you mean by 'financially independent' but most people on this subreddit use that term to mean that you have so much money you don't have to work a job, just own businesses/get interest from investments. It might be confusing to not understand that so that's why I'm letting you know.

The obvious answer to your question would be owning a house for yourself. If you've done that, then I don't think you want to be a landlord unless you really want to Be A Landlord and deal with all the headache of that, and the responsibility to your tenants, it's a part time job at least.

In reality, the next step is what we call the 'boring middle'. It's the part where you are basically doing everything you can at your income level and you just need to work on your career and your life and not screw up for about 40 years, then retire comfortably. If your goal is to retire early (and have a fixed income while all your friends still work) or join the ownership class and be a boss of businesses and a landlord of tenants (you probably dont make enough to do this and it's quite a lot of work and responsibility, it isn't 'personal finance') then you're all good and you and your friends can keep each other accountable.

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