Clever Approaches in Your 20s

      What would you do if, at 23, you had $70,000 remaining each year after covering your expenses? Would you invest it all in retirement for a smoother path to financial independence, or would you save for a down payment before expenses rise with children, a mortgage, and upkeep?

      This week, we address that real-life dilemma and examine how to find the right balance between current freedom and future security.

      Along the way, we consider whether a 0.40% fee for automated tax-loss harvesting is really justifiable and discuss if the emergence of mega-corporations signifies the end for small-cap value investing.

      Listener Questions in This Episode

      “Julio” asks: How should we allocate savings between Coast FI and a future down payment, and where should that down payment be held? (1:48)

      Lindsay asks: Is a 0.40% fee worth it for Fidelity’s tax-loss harvesting, and how do we transition back to self-managed index funds? (32:31)

      Greg asks: If a few large firms dominate, should we disregard historical trends and focus solely on top companies instead of broad markets and small-cap value? (50:51)

      Key Takeaways

      The optimal savings balance may hinge more on your personal definition of “home” than on calculations.

      Creating a down payment may be the quickest route to Coast FI, but for reasons that might surprise you.

      Finding a safe place to hold cash is more complex than it appears, especially when the market lures you with better returns.

      That 0.40% fee could either be a hidden burden or a wise trade-off, depending on a frequently overlooked aspect.

      While the growth of mega-caps seems relentless, history often defies expectations, even of the largest players.

      Genuine diversification is not about guessing which investments will succeed; it’s about safeguarding your future self from the overconfidence of today.

      Chapters

      (Note: Timestamps may vary on different devices due to dynamic advertising segments. The timestamps provided are approximate and may differ by a few minutes based on ad lengths.)

      (0:00) Are we moving toward a dystopian future

      (1:48) A 23-year-old earning $125k and facing a significant savings gap

      (8:52) House prices, down payment amounts, and the figures influencing the split

      (10:47) The case for a savings snowball, protection against matches, and trade-offs in timelines

      (25:14) Best places to keep a down payment and why cash surpasses stocks for preparedness

      (32:31) Is 0.40% worth it for tax-loss harvesting?

      (36:24) Comparing fees against potential tax savings, turnover, and exit strategies

      (50:51) Should a dystopian outlook alter our portfolios?

      (54:36) Exploring small-cap value beyond tech, mergers, and global prospects

      (1:11:02) Positivity, innovation, and why investing still assumes continued progress

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