[betaby]

> If you save that $3k/m over 20 years and put it into Vanguard ETFs (at 7% over 20 years), you’ll be 38 and have $1.5 million in the bank! Save $6k/m, and you’ll have $3 million at 38. Yes, I said that correctly. Save $1k/m and you’ll have $500k by 38.

Simply, no. No. That's not how it work. You can't find index returning 7% avg on 20 year interval. Plus that gains are taxable in many contries, sometimes heavily.

[linkregister]

A Roth IRA (a post-tax retirement account) in the United States will permit untaxed capital gains. The maximum yearly contribution is $18,000.

The S&P 500 returns 7% average on most 20-year intervals. [1]

1. https://dqydj.com/sp-500-return-calculator/ ; I tried to find a 20-year interval less than 7%, I could only find a few terminating in the last ten years. They were above 6.5%.

(not that I find most of what is in this essay plausible; that one quoted excerpt is fine)

[uiri]

$18k is the maximum yearly contribution to a 401(k) - it can be either a Roth or a traditional account. The money in your Roth 401(k) is less accessible than that in a Roth IRA until you convert the 401(k) into an IRA. You have to be lucky enough to have an employer whose 401(k) plan includes an S&P 500 fund with a decent management expense ratio. You also need to be lucky enough to have one which allows you to contribute to Roth accounts.

Roth accounts only make sense when you expect your effective income tax rate in retirement to be higher than your current marginal tax rate. In the current US system, your marginal rate at $35k is 15%. A Roth account would make sense for such an earner who expects to earn at least $45k or so a year in retirement. However, once your marginal rate is 25%, you have to be well into the six figures (around $230-240k) before your effective rate hits 25%. For almost anyone in the 25% bracket in the US, the traditional 401k/IRA makes more sense. If you're actually expecting six figure retirement income, you should be trying to shift as much of that into long term capital gains as possible. This also all assumes a single earner - double the income thresholds if you're a married couple.

[Fezzik]

According to the IRS the maximim contribution to a Roth IRA is far less: $5,500.

https://www.irs.gov/retirement-plans/plan-participant-employ...

[jlgaddis]

Yep, though once you reach a certain age it goes up to $6,000/year.

The $18,000 number sounds familiar. I think that's the maximum annual contributon to a 401(k) but don't quote me on that.

[Existenceblinks]

People say you should do reckless things when you are still young but strangely enough they also encourage to save money during that age, (almost 20 years?), to spend when you are quite old there.

Saving isn't wrong, but man, can average people save $3k/month? In developing countries, $3k is probably more than your entire salary.

I'd say that's simply NO NO NO NO NO NO way.

[Existenceblinks]

Alright, down vote me more dudes. You should give reasons for down voting. I'd guess it's just because of the "NO NO NO NO NO NO". And that's BS.