I’ve blogged many a times over the years about my Roth IRA and the quasi-obsession I have with making sure I always max it out. Since I love my Roth so much, you would think I would be just as eager to open one up for Girl Ninja. Not so much the case. Homegirl ain’t got no Roth.
Why you ask?
Is it because I hate her and want her to be poor when we’re old?
Is it because I want her to be financially dependent on me so she doesn’t leave me for some other dude?
Or is it that I’m lazy and just haven’t gotten around to it yet?
I pick option D…. None of the above.
We, the Ninja household, personally believe starting a Roth IRA for Girl Ninja would be overkill. Yes, overkill. Here’s why…
1) I believe investing 15% of our gross investment for retirement is sufficient.
Could we invest 20%, 25%, or 30% of our income? Sure. But why do we need $10,000,000 waiting for us when we are 65? I’m a firm believer there is a such thing as OVER-investing. 15% diversified through a handful of Vanguard Mutual funds should do just fine over 40 years.
2) I believe historical averages will remain relatively consistent.
Sure the markets could tank and the returns we’ve seen the throughout history could go away. But if they do, guess what? My retirement portfolio is going to be the least of my worries. Having food, water, and ammunition would be top of my priority list.
I mean, most Americans don’t put away 3% let alone 15%. I should, by default, be better protected than the vast majority of my peers. If my 15% invested over 40 years can’t get me by in retirement, I don’t think 20% or 30% would have made me any better off. How you invest (diversifying, consistency, etc) is often more important than how much you invest.
3) We aren’t being reckless.
If anything, we are probably saving too much. It’s taken me five years to build up my retirement portfolio, but it’s only taken Girl Ninja and I 2.5 years to amass an equal amount in our savings account. Heck just last week we put $2,000 in to a taxable investment account so we could start saving for shorter terms (10-15 years). Sure, we could have put that in to a Roth instead, but thinking about having some excess liquidity in our 40’s is hardly irresponsible.
I get that many of you worship your retirement accounts and contribute excessive amounts to them religiously. That’s great. You’ll be hella rich when you’re in your 70’s. That’ just not how we roll or what we want for ourselves. Retirement is cool, but so is saving, investing for the short-term, and…GASP… enjoying some of our money in your 20’s.