[Ashley]

How do you all overcome “information paralysis”? Everywhere I turn, I see different takes on finance from people who seem credible (for example: “you must do a taxable brokerage if you want to retire early, the penalties for breaking into a 401k are wicked” vs “Why on earth would you do a taxable brokerage, take the 401k penalties”!.

See also: the great “Roth vs traditional” debate, and on and on) and it leads to me taking no action because I’m afraid of doing the wrong thing.

I’ve been trying to work up the courage to make changes to my workplace 401k investments for months, right now it’s maxed out with a great match….but only invested in a target date fund, and I’m struggling to make a move.

It’s not for lack of information or input, but multiple people who seem knowledgeable on the topic have vastly different opinions.

Any advice on how to unjam myself here and move forward?

[Tony]

When you look for information use the word “simple” or “easy” in your search. Just do those things.

Keep it simple and you will get what you want.

[Jule]

I’ve never heard anyone encourage someone to take the penalty in the retirement accounts.

More importantly, personal finance is personal and it is not a one size fits all.

It all depends on your needs, goals, income, tax bracket, etc.

[Mia]

This is normal! At least for me I think this is a normal part of learning. It’s great that your considering multiple views points. What helped me was 1.

Focus on one next decision. Current is 401k distributions. If you take 1 more year to decide on an early retirement strategy that’s fine.

2. Re: 401k, what helped me was to calculate what my current account value would have been if I’d been following one of the suggested mixes instead of the target fund.

Seeing the big number I had already missed out on, based on real market performance over 10+ years helped me feel it in my gut instead of it all just swirling around as theoretical options.

P.s., I know info overload is the problem, but an episode that helped me gel some of the swirling together was Money Guy Show “3 Ways to Retire Early” episode.

[Tony]

Never stop learning, never stop asking questions. After a few years of absorbing information and asking questions, you’ll find that the same general answers to your questions keep popping up.

Once you realize this, stick to those few ‘experts’ who can explain complex ideas easily and who aren’t pushing products on you.

Ignore everyone else until you’re ready to branch out into niche areas like real estate, tax efficiency, drawdown strategies, etc.

The beauty of all of this is that it can be verified by math.

In your example, you’ve probably heard that total market funds are better than target date funds.

This is easy enough to verify by comparing your target date fund performance to the 5/10/max year performance of the other funds offered by your benefits manager.

Take this ‘trust but verify’ approach to all your investment questions and you’ll do just fine!

Other topics like traditional vs Roth, buy vs rent, pay off debt vs leverage debt and invest are often personal choices and don’t have a large impact so long as you continue to follow the best practices of saving, reducing spending, and investing.

[Michael]

At the end of the day… there are a lot of roads that lead to Rome. People can retire quite successfully using a variety of savings strategies- Roth, Trad, Taxable, RE…all of it.

If you can live on less than you make, avoid consumer debt, and invest the difference in a diversified, low cost, index fund portfolio you are miles and miles ahead of average.

Don’t get sucked into the noise (and there is a lot of noise) and focus on the fundamentals because in 20 years…the fundamentals are what gets you there.

[Frank]

The best thing to do is research what these voices actually do with their own finances.

The truth is that most of your popular personal finance people — especially if they are associated with Bogleheards — are hoarders and will always trend towards ridiculous conservancy as if the highest goal in life is to die with as much money possible.

Find out how long they plan to work and how much they plan to spend.
Another set of people are more interested in media or selling stuff than they are in personal finance.

Their advice is typically cookie-cutter and relies heavily on the financial services industry.

Anyone with a lot of ads on their podcast or blog or whatever is likely to fall into this category, particularly if the ads are from robo-advisors, retirement calculator people or similar.

Some have stuff for sale — courses, books, clubs, you name it. Caveat emptor there. You don’t need to buy anything to do this.

Avoid listening to people who act like “this is complicated so you definitely need lots of help.” People who recommend robo-advisors and target date funds generally fall into this category and are likely to be financial advisors who want you to come to them eventually.

In the end, the truth is that if you are saving money and investing it in simple index funds, you will probably do fine. Regarding target date funds, however, expect to work an extra decade if that is your choice.

Just pick a basic index fund instead. This is not hard and nothing is going to blow up in your face unless you are looking for “magic buttons to make my money grow really fast in secret investments that “they” don’t want you to know about.”

Automate your saving and investing. That is the best thing. Then take your time learning more about it.

You have years to do that. This is not really hard, it’s just unfamiliar to start.

[Jay]

Pick one that resonates with you and go for it.
I personally really like the money guy show order of operations.

And follow that to a T. Step 7 is where I go up to 50% savings.

[Cody]

I think the “who seems credible” part is the trickiest. When someone leads with fear, you must question their incentives and personal biases.

Brad and I are recording a deep dive for the ChooseFI podcast tomorrow to discuss case studies about early retirees (age 45) who did nothing but contribute to traditional 401(k)s along the way.

And a few more.

It’s helpful to understand the actual tactics step-by-step rather than making decisions based on perception, opinions, and boogeymen that don’t actually exist.

You may benefit most from hiring a financial planner who understands your unique values and comprehensive financial situation.

[Jeff]

While some optimizations may help, the most important thing you can do to get started is invest early and often.

Target date fund vs VTSAX won’t matter at all if you aren’t making contributions.

Find a good plan that works for you and stick with it.

Everyone has different goals and what’s right for them may not be right for you.

[Jason]

Spend less than you make.. Invest the difference. Read, Read and Read some more. Soon you’ll have your own opinions, and value others less.

Save a lot.. Make sure it’s invested in something low cost, you’ll be way ahead of most people.

[Mark]

Get ur investment plan together. Execute plan. Ignore the noise. The basics are the basics for a reason.. because they work. Succeeding in this “game” is 90% basics.

The other 10% is flair.

Nail the basics.

[Lisa]

I read Simple Path to Wealth by JL Colins and started there. Pick one area and learn about that. Then pick another area and learn.

Remember, everyone that is on here doesn’t always know what they are saying. It’s not a one size fits all.

It’s what resonates with you and your situation. So don’t be afraid to pick this and that from each and put together a roadmap/plan that works for you and your family.

If you plan to retire early, before you can draw from 401k, I would have money in a brokerage ready to go.

I personally like multiple buckets so you have options.

[Christopher]

Most of this junk isn’t “information”, it’s opinion. Is Roth better or worse than traditional? Depends on your current and future tax situation (that’s information).

There’s an analytic “best” but it depends on information specific to you.

Early access to 401ks can be done without penalty, but it takes planning – those plans are information, and they are specific to your situation.

You should have a taxable brokerage account if you’re able to max your tax shelters and still have extra dollars left to save and invest. It’s fine if you don’t.

You’ll get as many opinions as people you ask. Personal finance is personal.

The less similar a person’s situation is to your own, the less valuable their advice is likely to be.

[Justin]

As long as you are saving as much as possible, minimizing fixed costs like housing, not buying new cars, etc the vehicle you save in is just marginal difference and slightly higher optimization.

Saving in brokerage account beats doing nothing, saving in a 401k beats doing nothing too.

It’s just tax optimization. Do you want to pay tax now or later? Will your income be higher now or later?

I have a pension so saving a bunch in my 401k won’t save me that much compared to someone who doesn’t have a pension.

[Matt]

Read The Simple Path to Wealth by JL Collins (there’s a new version too – get that one).

He lays a great foundation for the “why” behind his simple recommendations.

[Jill]

I’m 51 and have always been in target funds and have no HSA or brokerage account.

Just this year I moved my Roth and 401k to VTSAX after reading The Simple Path to Wealth only to hear people then say the book was outdated.

I can’t get an HSA. My retire early plan isn’t until I’m 60 so I don’t have a brokerage since I’ll be able to pull from my Roth at that age.

I have no clue if that’s the correct thinking though.

I guess my only advice is to just take baby steps.

[Roxanna]

Looking at your picture you seem fairly young (compared to me). If you were my daughter I would advise you to read The Simple Path to Wealth, allocate accordingly, and then take your time learning.

When you are young, you can be aggressive.

I think there is a lot of noise out there right now as the FI ‘expert’ pot grows larger and they try to get downloads, likes, etc.

Start simple and the see what is out there that resonates with you, your tolerance and your life goals.

[Mitch]

Choose one. Write a policy statement. Follow it. Tune out noise.
Any time you catch wind of something new, thats ok.

Consider it, and more importantly consider if it will dramatically improve your goals and or provide better sleep at night.

Sleep on it. Ask peers. And if it solves a need, write an updated statement and roll with it.

I heard a lot of noise on this path and stuck to VTI and chill until a year ago.

I hit FI and wanted to add diversification, studied it and changed to a portfolio that is closer to draw down ready (I’m not drawing on it).

[Author]

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