I’m going to skip over chapter 7 until tomorrow, and I don’t even have enough time to get to chapter 8, so I do hope you will read them for yourselves. Today is a big one, but let’s briefly talk about investments, as we look forward to retirement and helping out the kiddos with their college. Well I know retirement sounds great to most of us, right? But not if we don’t have the proper investments so let’s start there.
Chapter 9 is called, “The Pinnacle Point: understanding investments”. I am not a financial advisor so I am only sharing what I have gleaned from this book and any past experiences. Please get advice if you need it. You can check out Ramsey Solutions to find an ELP (Endorsed Local Provider) in your area. (copy and paste link below) Investing is Baby Step 4, after we are out of debt and have built a full Emergency Fund. Mr Ramsey goes into detail about the different types of investments available, as well as some pros and cons, so check it out. But I will share with you here the order in which we should invest that 15% of our household income
1- maximize your company’s match in your 401k or like retirement account. This is a 100% match, dollar for dollar, of whatever you put into your account up to a certain percent, so find out what that is and put in enough to get all that “free” money from your company.
2- maximize a ROTH IRA. While the 401k is pre-tax money, that means we do not pay income taxes on it right now, but we do have to pay taxes on it when we take it out at retirement. With this ROTH IRA, we pay taxes now but any withdrawals are tax free when we take it out later. So the funds used here is after tax, but again, not taxed later. This includes all the gains we may make on this account too, so max it out.
3- if we still have not filled the 15% mark, then go back and increase the 401k to the max allowed.
4- if you still haven’t filled that 15% mark, turn to an investment pro to help you out with mutual funds and the like
You can find all the maximums allowed by law for each account type on the good old www.
One last fun thing about investing, Mr Ramsey says, “…the Pinnacle Point is the point when your savings and investments – after years and years of dedication and hard work – make more money for you in a year than you make for yourself.” (p196) The major takeaway is, we must think about our future, so gauge your risk tolerance and invest now for then.
Chapter 10 is called “From Fruition to Tuition: planning for retirement and college”. I will only say that some people have a hard time with the order of priority in which Mr Ramsey places these. But as he says, you will definitely need to retire some day, but there’s no guarantee your children will go to college. Besides this, it should be their responsibility to find ways to pay, or at minimum help out paying, for their education. Scholarships are available everywhere and hard work is good for the soul. We must stop babying our children and encourage them to take responsibility for their lives. Mom and Dad might not always be around, so time to grow up.
This is coming from someone who was blessed to begin saving for my son’s college the moment he was born, and whose son chose to go to the much lesser expensive state college, as well as take college credit courses while he was still in high school, and then worked at college, during the semester, to help pay for his tuition. By God’s Grace, he never had any college debt. Yet too many young adults are starting out their careers saddled with heavy amounts of debt due to their education because they do not know any better. If this is a concern, Mr Ramsey gives very helpful advice, check it out in the book.
How to Choose a Financial Advisor- Ramsey Solutions
https://www.ramseysolutions.com/retirement/how-to-hire-a-financial-advisor?
2023’s Got A Minute? Book Club
January: The First & Best Book Ever: The Bible
February: Love Is In the Air: “The 5 Love Languages: The Secret to Love That Lasts” by Gary Chapman
March: Spring Growth: “Secrets of the Vine” by Bruce Wilkinson
April: Living the Resurrected Life: “The Wonderful Spirit Filled Life” by Dr Charles Stanley
May: My Spiritual Mom: “Making Good Habits Breaking Bad Habits” by Joyce Meyer
June: Spiritual Dad: “It’s Not About Me- Rescue from the Life We Thought Would Make Us Happy” by Max Lucado
July: Financial Freedom “Complete Guide to Money” by Dave Ramsey
<>< Peace, Diane
