My savings rate and expenses – September 2017 Update

Welcome to another monthly savings rate update.

We’re right in the middle of beautiful fall foliage season in the northeast. I’ve been spending a lot of time outside enjoying the warm fall weather and the ever changing colors.

I mentioned in my August update that a good chunk of my travel costs for my awesome trip to see the eclipse would fall in September so I’m not expecting a great month for savings here.

First, I’ll take a look at my gross income savings rate.

gross income savings rate september 2017

Continue reading “My savings rate and expenses – September 2017 Update”

401k contribution limits for 2018

The IRS ruling on next year’s 401k, IRA and HSA limits is finally here and investors who already max out their 401k are getting some good news.

For the first time since 2015, the IRS has bumped up the 401k limit. In 2018, it the limit will be $18,500, up $500 from the current $18,000. This new change also applies to other retirement accounts that mirror the 401k limit like the 403b, most 457 plans and the TSP.

The catch up contributions for those over 50 remain unchanged at $6000 for 2018 meaning the maximum deferral anyone can make is $24,500 this year, up from $24000 last year.

The benefit for heavy investors is two fold.

First, you get to reduce your taxable income by another $500 this year which can save someone in the 25% tax bracket $125 on their tax bill. That’s additional money that can be invested in a taxable account to continue growing your portfolio.

Second, the 401k is already one of the best ways to grow your portfolio and additional money in that account will help your long term results.

That means, you not only get to keep more of your money that would otherwise be taxed but can now be invested or spent but you also get tax-free growth on the additional $500 for as long as the money is in the 401k.

$500 may not seem like much but $500 extra each year for thirty years will mean you’ll have $66,000 extra in your account after 30 years. On top of that if you invest the extra $125 in tax savings every year in a taxable account, you’ll have an extra $13,000 in that account(15% tax rate assumed).

That same investment($500 every year) would only be worth $52,000 in a taxable account(15% tax rate assumed) for that same period. That’s a pretty big difference and shows the power of tax-advantaged investing and why I’m excited to get the $500 bump this year.

Unfortunately, the IRA limits, both Roth and traditional, remain unchanged at $5500 but the phase-out ranges for those for both are going up a little bit. That can help those on the cusp of being eligible for the traditional IRA deduction or Roth IRA eligibility.

The other piece of good news not mentioned in the IRS releases is that the HSA contribution limit is also going up this year. People with single coverage will have be able to save an additional $50 this year to a total of $3400 and those with family coverage get an extra $150 in tax-advantaged space up to $6900.

I wrote about the benefit of an HSA before but in essence, it’s the best tax-advantaged savings account available and any additional money you can squeeze into it is money well spent. It’s essentially tax-free on both ends(assuming you use it for medical expenses on the back end) and saves you from FICA taxes as well.

Overall, this is great news for investors everywhere especially those of us striving for financial freedom. Maxing out tax-advantaged space is a must if you are lucky enough to be able to do it and 2018 will give us more space to work with.

I’ll certainly be happy to be able to add another $550/year into my tax-advantaged space and hope others are too. I only wish the IRA limit went up to $6000 too as it’d be nice to just make it an even $500/month for the max out!

Are you already maxing out your 401k and if so, are you planning to take advantaged of the additional tax-advantaged space?

Getting my girlfriend excited about saving money!

I was surprised when my door burst open earlier this week and future Mrs. TimeInTheMarket ran in with a sheet in her hand.

“Look,” she said pointing to sheet, “I gained $364 this year!,” she continued with an excited tone to her voice.

I was a bit confused as she had never been one to get excited about money before. We’ve  talked about my portfolio and my desire to retire early in the past but they were never conversations she was too eager to have.

In fact the below cartoon captures her interest in the subject perfectly as resorts to nodding half the time when I start talking finances and eventually just tells me that’s my area of our life to handle, not that I mind!

mutual funds boring comic

In any case, she gave me the paper and I was intrigued to see that it was her simple IRA statement. Were we really going to have a conversation about stocks and retirement accounts that I didn’t start? Continue reading “Getting my girlfriend excited about saving money!”

My portfolio – October 2017 update

It’s spreadsheet weekend and time to look at my portfolio again. I like looking at my portfolio monthly not only because I like seeing the numbers go up but also because it helps me see where I am against my asset allocation.

That key piece of info allows me to target next month’s contributions strategically and/or shift some assets that have performed too well so I’m always buying asset classes that are lagging behind. Taking advantage of a divergence in asset allocation doesn’t require a monthly review but I happen to like spreadsheet and numbers so it’s not a bother for me.

The S&P 500 had the best months since last December with a 3.42% return and continues to show no sign of stopping taking the YTD return to just a bit under 14%. That’s certainly meant good things for my portfolio and I’m thinking the S&P 500’s performance will continue my run of positive months.

For those keeping track, my portfolio has now had 12 straight months of growth and 6 of those months grew by more than $10,000. I know this type of market won’t be around forever but I’m enjoying the ride up for now.

It’s time to take a look at my portfolio today.

As a reminder, last month’s total had me just a hair under 450k at $448,776.58.

October 2017 portfolio update Continue reading “My portfolio – October 2017 update”

September dividend update

Hi and welcome to another monthly dividend update. September is one of the big four months where investors like myself who hold a lot of ETFs and/or mutual funds get a good chunk of their dividends.

The last big one was June and that dividend post showed awesome results for my dividend employee Steve. If you’re not familiar with Steve, he’s my portfolio in worker form and I like to see what his annual hourly wage is as I grow my portfolio and dividend payouts.

June’s dividend payout was a bonkers 46% more than the previous June but some of that was driven by an unexpected payout from one of my international funds that normally only pays in December. That means I’m not expecting September to grow quite as much but still expect pretty decent growth from the continual reinvestment and added cash.

September 2016’s dividends came in at a $1265.09 so that’s the baseline from which I’ll be comparing this month.

monthly dividend update Continue reading “September dividend update”

My savings rate and expenses – August update

Hi and welcome to another monthly savings rate update.

I had a pretty awesome vacation in August so I knew my savings rate wouldn’t be anything to write home about but the main expenses(airbnb, plane tickets, car rental) for that trip actually fell into September as I didn’t cut my girlfriend a check until then.

That’ll serve to make this month slightly better although all of the trip expenses that weren’t listed above occurred here and I had some other one-time expenses like my car and rental insurance in August as well.

Let’s take a look at my gross income breakdown for August.

gross income savings rate august 2017 Continue reading “My savings rate and expenses – August update”

Recent purchase – The Madison Square Garden Company(MSG)

Guys, I own a piece of the Knicks now!

I’ve always been a basketball fan and the recent purchases of NBA franchises at increasingly higher prices has led me to take a closer look this stock. There aren’t a ton of ways to invest in sports teams with only a few publicly traded companies offering investors an opportunity to do that and MSG is one of those.

My recent portfolio update showed me lagging behind on my mid-cap allocation and MSG fits that criteria with a market cap just above 5B. The stock has had a solid year and is up 24% YTD. I never looked at the stock before but the not so recent spin off of MSG Networks, the under performing cable assets the company used to own has made it an intriguing proposition.

MSG owns the Knicks but also owns a variety of other assets most notably the Rangers, the most valuable NHL team and the MSG arena.

Valuing an trophy asset such as a basketball team is very tricky. Forbes does an annual list of NBA valuations which has the Knicks listed at 3.3B for 2017 so that’s a good starting point but how does that valuation compare to the actual amount people are willing to pay to own such a unique luxury asset. The recent purchase of the Rockets at 2.2B gives me a good start pointing but it’s also worth looking at a few other recent NBA teams that have changed hands as well.  Continue reading “Recent purchase – The Madison Square Garden Company(MSG)”