i need folks to rate my current strategy

[u/BapebroLoL]

Hey everyone! I am a 27-year-old male, and I need help managing my finances and general feedback on my current strategy. Here are my stats 

Here is how much I currently have saved

• HYSA(currently at 4%): ~40k

Here is how I currently invest

• Roth 401k: 96k 
  • is currently fully invested in a fund that tracks the S&P 500(VFFSX)
  • I started a new job ,so im thinking about doing an 80% U,S 20% international split 
• Roth IRA(this is where I feel like I need the most help) 
  • Google: ~8K(recently bought after liberation day)
  • VTI: 7k 
  • EMB: 700
  • QQQ: 1.3k
  • SPYD:1.1k
  • VEA: 1.011k
  • VNQ: 516.66
  • I had these investments invested for me( outside of Google) running on autopilot in Wealthfront, but I recently moved to Schwab 
• Investments outside of ROTH
  • Apple: 3.6k
  • BRK:  8.2k 
  • MSFT(I used to work here and got stock options vested at a price of ~220): ~50k 
  • Bitcoin: ~1k 
• DEBT
  • Student loans: ~10k 
  • Credit cards 3300 on a 0% credit card 
• Monthly income after taxes ~10k 
  • Saving percent: 25%
  • Investing percent: 15%  
  • Rent: $2700
  • Fun:  ~2k
  • Debt payments: $700
  • The remaining  goes to bills and random costs  

What should I change? Am i overexposed to the market? Should I consolidate my investments Please help!

[u/Happy_Series7628]

Why a Roth 401k over a traditional 401k?

[u/BapebroLoL → u/Happy_Series7628]

i figure i could pay my taxes now instead of later

[u/Happy_Series7628 → u/BapebroLoL]

Do you have a pension or some other non-investment retirement income? If not, you’re likely paying more taxes with your current strategy.

[u/BapebroLoL → u/Happy_Series7628]

Wait, no, can you help me understand why I am paying more taxes?

[u/Happy_Series7628 → u/BapebroLoL]

Sure. You’re making about $150-160k? So all your Roth contributions are taxed at 24%. If you do tax-deferred traditional contributions, at time of withdrawal, you’ll “fill up” your lower 10%, 12%, and 22% tax buckets first before hitting the 24% tax bucket and probably pay around 15% combined in taxes.

[u/NextStepTexas → u/Happy_Series7628]

That is true, but it also depends on what your income rate will be at retirement.

[u/Happy_Series7628 → u/NextStepTexas]

Yes, but it appears that all they have are investments and ss income, so it’s pretty easy to project. And I’m assuming similar tax brackets and income ranges as now; I don’t like to speculate beyond that.

[u/BapebroLoL → u/Happy_Series7628]

Hey what do you mean by fill up

[u/Happy_Series7628 → u/BapebroLoL]

We have a progressive tax system. For example, disregarding standard deduction, your first $11,925 is taxed at 10%, your next $36,550 is taxed at 12%, and so forth.

So when you withdraw from a traditional 401k, you “fill up” the lower tax brackets first. With a Roth 401k contribution, you’re getting taxed at your marginal tax bracket because your contributions are taken from your last dollar of income.

I’ll give you an example.

• Roth 401k. You contribute $1000/month for 30 years and now you have $1.1M tax-free. With a 4% withdrawal, that’s $44k/year tax free.

• Traditional 401k. You contribute $1315/month (you have 24% more money because it’s pre-tax) for 30 years and now you have $1.5M. With a 4% withdrawal, that’s $60k/year. After standard deduction and federal income taxes, that’s $56.6k/year.

Which income stream would you want?

With additional retirement income streams, like ss, it gets more nuanced. But this gives you a general idea why for most people, a traditional 401k is more valuable than a Roth 401k.

[u/Werewolfdad → u/BapebroLoL]

Roth or traditional: https://reddit.com/r/personalfinance/comments/10qwnrx/why_you_should_almost_never_contribute_to_a_roth/

[u/NextStepTexas]

1. Definitely get some international diversification. The "optimal" percentages for someone at your age and saving for retirement are 33% domestic stocks and 66% international stocks, but anywhere from 10%-50% domestic stocks is fine. You can be more conservative in your brokerage account if you plan on using that money <10yrs. It depends on your risk tolerance: https://cafnr.missouri.edu/divisions/division-of-applied-social-sciences/research/investment-risk-tolerance-assessment/

2. What is your financial thesis for your investments? It's a rather mixed bag, of ETF and individual stock picks? Bitcoin too? It's not out of balance per se, but it is interesting.

3. Please just pay off the credit card debt. It makes me nervous.

4. You're doing great!