[Music] Typhoon Season has a question. And yes, he capitalized Foo. You get it, cuz F. I get it. I get. Just make sure you got. He was like, okay, okay, okay, okay. Typhoon Season's question says, I'm 34, and I'm on Step 8 of the Financial Order of Operations or the Food Nice. So far, I focused my savings rate and only invested in index Target Retirement funds. But how do I know when I need to change my allocation? So, it sounds like Typhoon has been listening to us for a while because one of the things that we say is that when you're early on in your financial journey, your savings rate is exponentially more important than your rate of return, meaning you don't want to lose a lot of mental calories thinking about how you're spreading out your dollars early on. We think that a great solution for folks who are just starting to build our Target Retirement funds because all you have to do is answer two questions: how much money can I save and then when do I think I might need that.

money. So if I'm someone who's young, I might do a Target retirement fund out to 2060 or 2065, and that might be a great solution where all I've got to do is start dumping money into that fund, and it's going to naturally allocate for me over time. It's going to take a lot of the mental energy that it would require of me to allocate that portfolio. So that's great for folks who are starting out, but we are of the opinion that that's a great generalized solution. As your portfolio gets larger and as your unique financial situation gets more nuanced, it might make sense for you to move from more of a generalized solution to more of a specific unique solution to you. And I think that's the point where most people graduate past Target retirement funds. Yeah, it's typically step seven in the hyper accumulation phase. I love that we get to go a little deeper on what step seven is because what I like is that a lot of steps 1 through six is to cover the

basics of your cash reserves paying off the debt, and then maximizing all the tax benefits that our government is incentivized for you to think for the future. But when you get to step seven, now you're saying hey, how am I actually going to use this money? And you might find out if you're leaving the workforce early or you want to have access and buy your time even sooner, that you're going to need more money in after-tax accounts. Or maybe you realize hey, when you're in Step seven, you're like wow, I really maximized steps five and six, so I have all these tax-free assets, I have all these tax-deferred assets, but I don't have any after-tax assets in a brokerage account, so maybe I need to reprioritize that. It's very common though when you start thinking about those three buckets: the after-tax, the tax-free, and the tax-deferred, you're going to start looking at these accounts, and then you're going to say wait a minute, now I can see why tax location.

for my different account structures as well as what I hold in each of those account structures matters because in the beginning you know you're it's it's exactly what Bo said your savings rate is so much more important than what you're even choosing to invest in but you will get to this critical mass or this bowling point where the assets are now big enough that you're going to say well I have close to seven figures in retirement accounts because that is in in your 40s that is the account that typically crosses into seven-figure status for most millionaires is those 401ks the 403bs and you're going to say you know what I ought to do let's hold my conservative stuff in that because bonds already pay ordinary income taxes let's take advantage but you know what I know that I want my Roth assets let's stick it to the government legally by letting those be growth assets that I can grow and maximize all that you know um compounding growth over decades so let's put in something that's probably

an equity index type fund, or something like that, so you actually are getting the market instead of trying to beat the market. But then you're going to think about your tax book account. Well, this is where I need my liquidity, so I have emergency reserves, but I also have opportunity Capital here. But then you say, but I know Dividends are taxed in a favorable way. I know capital gains are taxed in a favorable way. So I'm going to have a mix of several different types of Investments and assets there. This is the why you will realize, hey, yeah, it's time to go beyond what I was doing with index Target retirement funds. You've graduated Beyond it. And this is also when I think remember how I say that complexity finds you success creates complexity an example that this is a perfect example of that. So see if you can self-assess and figure out what you need to do. But if you can't, there's nothing wrong once you graduate from the do-it-yourself side to actually bringing in professional help to help you maximize.

because you've only had one retirement or planning for one retirement why not bring somebody who's done this hundreds of times so that you can kind of protect yourself from the blind spots and then optimize every situation that you that's provided to you and kudos to you tyon 30 four step eight that's awesome certainly uh without knowing the numbers certainly doing the right things at the right time your future self will likely thank you for that

When Should I Change Up My Investment Allocation?

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When Should I Change Up My Investment Allocation?

When Should I Change Up My Investment Allocation?

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