Hi Money Minder,
So, my partner and I are both 28 and we rake in $210,000 each year. We’ve been killing it by paying off $90,000 in student loans and are almost done with our $45,000 car debt (just $15,000 left, woohoo!). Right now, we’ve got $15,000 just chilling in savings and an investment bundle worth $100,000, full of VTO, VOO, QQQ, and SMH. We drop $3,500 monthly into these stocks. Oh, and we’ve been putting 6% of our income into our 401(k) to get that sweet company match.
Here’s the deal – we’re planning to head back to India in 5-7 years. Should we amp up the 401(k) contributions or stick to our current setup? What are the ups and downs of going all in with the 401(k) in our situation?
Thanks for any advice or insights you can provide!
Seeking Guidance
Response from THE MONEY MINDER:
Hello There,
Hello, it’s great to hear about the progress you and your husband have made in paying off your student loans and nearing the end of your car loan. You’ve clearly shown dedication and discipline in managing your finances thus far. Considering your plan to return to India within 5-7 years, it’s important to reassess your financial strategy.
In your case, maximizing your 401(k) contributions may be a beneficial move. By contributing the maximum allowed amount to your 401(k), you can take advantage of the tax benefits and potentially grow your retirement savings significantly before heading back to India. The power of compound interest over time can greatly benefit from increasing your contributions now.
However, it’s essential to balance this decision with your other financial goals, such as building up your savings for your relocation to India and continuing to invest in your current portfolio. Ensure you have a solid emergency fund in place and consider how contributing more to your 401(k) may impact your short-term financial needs.
One approach could be to gradually increase your 401(k) contributions over time while also maintaining your current investment contributions. This way, you can take steps towards maximizing your retirement savings without neglecting other financial priorities.
Overall, maximizing your 401(k) contributions can be a wise long-term financial move, but it’s essential to consider how this aligns with your overall financial plan and goals. Keep up the good work in managing your finances and make informed decisions that support your future financial well-being.
Farewell from THE MONEY MINDER.
