> You will pay for your day-to-day expenses almost entirely through bonuses and stock, redirecting much of your base salary to retirement.
I think that will not be easy. Let's say you get hired as a "Senior Software Development Engineer" at Microsoft (internal folks will know this is Level 63 or 64). Your signing bonus will be approximately $20,000 to $30,000, and your stock award will be highly variable but generally has a 1-year cliff for vesting, so it can be disregarded your first year.* 20k-30k per year gives you only a minimal subsistence in the Seattle region or SF Bay Area, especially with the high cost of housing in both.
* https://www.levels.fyi/salary/Microsoft/SE/Senior-SDE/ gives a good idea of how much Microsoft pays a Level 63. Regarding stock awards, Microsoft does not give stock options or RSUs. Instead we have a RSU-like system for equity awards where the company gives you unrestricted stock on a schedule. It is RSU-like in that you can't sell the stock until it "vests", but unlike an RSU in that you don't hold the stock at all until it "vests", only a future right to get it.
Perhaps what op has in mind is that some of these big companies let you contribute post-tax money to your 401K (that you can then roll over into a roth IRA even if you are above the income limits to contribute directly to a roth) there's a like $56K limit on what you put in your 401K. (this is the total of your pre-tax contributions + your employer matching + your post tax contributions)
Sure, you can just stuff money in your brokerage account and save money post-tax, but then you go without the bankruptcy or tax protections that the stuff that goes through your 401K gets, so there's a lot of benefit to maxing your 401K in these situations. if you can swing it, it's worth scrimping, because as far as I can tell, I can only get money into my 401K that is processed through payroll (bonus and base, but not stock) and jobs that have these post-tax 401Ks are rare, in my experience, so when you get the chance, it's worth some pain to take advantage of it.
I remember my first year at a company with retirement plans like this, I took my signing bonus in cash ('cause I didn't get my 401K sorted by then) but my 'net pay' was 0 for many months afterward as I worked to max out the 401K before year-end
eh, it conveys all the advantages of a roth IRA, plus (I believe possibly) stronger bankruptcy protections, (because it's rolled over from a 401K) - so assuming you can contribute to it (which is to say, you have money after maxing your pre-tax 401K) I think that it's a thing you should consider.
Note, I think that maxing out your pre-tax retirement savings first is a good idea because it manages risk well; when you go to withdraw, you pay taxes based on how much you withdraw; If you are rich when you retire, you'll pay a lot of taxes, but that isn't exactly a disaster. If you don't have enough to withdraw a lot, you won't pay a lot of taxes on the other end as-is, and you will have put more in on the other side, so you are net better off. So overall, I agree that pre-tax contributions should be maxed out first, but after that? if you have the opportunity to add another 26K/yr to a roth IRA, and you are making the kind of money where you can swing it, it's probably a good idea.
(Note, I'm no expert. I'd be interested to hear why you think that saving in post-tax accounts is better than saving in roth IRA accounts, if that's what you are suggesting.)
true, but at the significant cost of losing the ability to do tax loss harvesting on the (presumably) large amount you are investing through the back door. plus the withdrawals are taxed (regular Roth are bit but backdoor is).
so I think what I'm describing here is different from the link - my employer deducts post-tax money from my paycheck into the 401k, then rolls that over into something that will roll over into a roth IRA when I leave the company. As far as I can tell, that's what OP was speaking of (See the "Daily roth in-plan conversion" portion of the paycheck deduction screenshot.)
The important part is that if you really set your contributions to 65% then you will max out your annual retirement contribution limits early on (front loading). So the rest of the year you will receive your full paycheck (- ESPP, which you'll also get back every quarter).
I see. It is not clear from reading those top bullet points alone that you are not suggesting I follow the "save as much as possible" strategy the whole calendar year, but only until I reach the 401(k) limit. There is also a bullet point "only invest in tax-sheltered accounts", but I could also save money in a bank savings account, which I would consider a taxable non-"investment" account.
Lol absolutely don't use the MSIT image you get from PXE boot on corpnet. Install a clean Windows 10 Enterprise image then do a domain join to Microsoft's Azure Active Directory instance.
Also forgot to mention open a Fidelity BrokerageLink account for your 401k.
- "Don't use the MSIT image you get from PXE boot on corpnet": The customized Microsoft-internal image works fine, and saves you time installing Office. You can't avoid "MSIT shovelware" by installing clean Windows; if you join corp.microsoft.com AD or @microsoft.com AAD, the same software will still be pushed to your PC eventually via System Center Config. Mgr. and Microsoft Intune.
In any case, soon you won't be able to do network boot to install anyway, either plain Windows or the customized Microsoft-internal image. CSE&O (Microsoft's IT department) intends to shut down the Windows Deployment Services network boot servers as part of its overall thrust to make the corporate network unnecessary and move Microsoft entirely to the cloud.
- "domain join to Microsoft's Azure Active Directory instance": If the machine is a desktop, I recommend you join to on-premise AD instead ([location].corp.microsoft.com). If you join your PC to AAD, you can connect to it via Remote Desktop only from another box that is also AAD-joined or on-premise-AD-joined. Which means if you want to work from home without a laptop by TSing/RDPing into your desktop, you won't be able to avoid joining your home computer to AAD - negating the current advantage of the CSE&O RD Gateway.
In addition, the management policies are slightly different between @microsoft.com AAD joined machines and on-premise-AD-joined boxes. Usually this is to the detriment of dev work on the AAD-joined boxes.
> Also forgot to mention open a Fidelity BrokerageLink account for your 401k.
I thought about adding it, but BrokerageLink requires a minimum balance transfer. By then, I figure that people will find out about invclub if they want to pursue more custom strategies.
I also added the note about the fresh Windows 10 Enterprise install. Ultimately, it's a wash. The group policy will apply one way or another.
I disagree on after-tax contributions. This is money that's in a pretty high tax bracket, and there's a decent chance you'll be in a lower one when you withdraw. It also takes away a lot of flexibility (retiring early, buying a home). I picked a random online retirement calculator. If you're 22, no savings, and can manage $19K in the traditional 401(k), including the match, that's $8M when you're 67.
Saving for retirement is great and all, but when is enough enough?
Yes, that's true. If you're wanting to buy a house that is a good reason to not put additional money in the Roth 401k. It still makes sense to do the Roth IRA, since you can withdraw your contributions early without penalty (subject to some rules).
As a page of essentially technical financial advice, to an outsider this almost reads like a parody of the strange, incredibly-monied world FAANG coders etc seem to live in, but strangely humour free.
It felt odd writing it. You are right, but when people do suddenly come into money (the initial cash signing bonus), they will sometimes do irrational things. Being able to step back from this emotional reaction will allow that money go much further.
Personal finance in this county is not difficult. 401(k) and IRA in an index fund with match will be enough to retire on, even if one does not put money into a brokerage account.
It would be good to add something on mentoring. This isn't covered very well in new employee orientation. But it's hard to figure out what advice to give because it's so team and role specific. Maybe the advice should be to just find one.
> Outlook rules. You will receive far more e-mail that you can actually manage. I only have three types of simple Outlook rules. First, for each Discussion list, I create a separate rule and folder. Second, I create a priority rule such that any e-mail from my manager or above goes directly to my INBOX (which triggers notifications). Third, everything else goes to a folder called Quiet, which I only check periodically (notifications suppressed).
I'm interested to hear about other rules or techniques to reduce distractions & noise from work comms.
I have a folder cathartically-named "useless bullshit" into which around 50% of my emails are automatically routed and never read. Also any email with a DL in the BCC field is automatically routed to the trash.
Quite an interesting guide. 50% match on a 401(k) is great. Although as far as asset allocation goes if you’re <35 I’d do 100% into VTSAX or equivalent. You can gradually convert to 90(stock)/10(cash or bonds).
50% match on the 401(k) is nothing special; a federal government employee who puts in 5% gets a 5% match (1% agency automatic, 3% 1:1 match, 1% 1:2 match). The great part is that there's no cap beyond that imposed by the IRS.
Microsoft contributes 50% of one’s contributions to their 401k, whereas federal government contributes up to 4% of one’s pay to contributions.
So if you contribute $19,000 at MSFT, you get an additional $9,500. If you contribute $19,000 at federal, and you earn $150k, you get an additional $6k, subject to 3 years vesting requirement.
Matching 3% to 5% of pay is common. Matching 50% of all contributions is not, and is far above the median, therefore I would consider a 50% match on contributions to be special. To get a similar 401k match in federal, you’d have to make almost $200k, whereas Microsoft is not restricting it by income.
These companies with internal anonymous communities are interesting to me.
Most places I worked the loudest folks who are there to tell you what is going on internally... we're just really loud and good at whipping up like-minded folks.
Their actual knowledge was very poor / very skewed.
The folks who really knew something didn't share much.
Maybe it is different at other companies but I'd be wary of spending any time on such a system at work.
I think that will not be easy. Let's say you get hired as a "Senior Software Development Engineer" at Microsoft (internal folks will know this is Level 63 or 64). Your signing bonus will be approximately $20,000 to $30,000, and your stock award will be highly variable but generally has a 1-year cliff for vesting, so it can be disregarded your first year.* 20k-30k per year gives you only a minimal subsistence in the Seattle region or SF Bay Area, especially with the high cost of housing in both.
* https://www.levels.fyi/salary/Microsoft/SE/Senior-SDE/ gives a good idea of how much Microsoft pays a Level 63. Regarding stock awards, Microsoft does not give stock options or RSUs. Instead we have a RSU-like system for equity awards where the company gives you unrestricted stock on a schedule. It is RSU-like in that you can't sell the stock until it "vests", but unlike an RSU in that you don't hold the stock at all until it "vests", only a future right to get it.