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I just wanted to say thanks for this thread, there is a lot of good info for me to read! I just opened a Roth IRA about a month ago (before I found this thread). Right now my plan is: $3k this year (already done), $3.5k next year, then max out every year after that. I'm still in school with about a year until I graduate and (hopefully) get a job. I still have some money sitting in my savings, should I just keep it there for emergencies or invest it in something else? I'm leaning towards keeping it there for now, although I like the idea of preparing for the future now when it's easy (20, no family, I don't spend a lot of money, etc).
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Mar 8, 2012 06:14
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Lt Moose posted:I still have some money sitting in my savings, should I just keep it there for emergencies or invest it in something else? I'm leaning towards keeping it there for now, although I like the idea of preparing for the future now when it's easy (20, no family, I don't spend a lot of money, etc). You absolutely should keep an emergency fund. Rule of thumb is ~1 years' worth of expenses (18 months is more conservative), though if you have as little income as it seems being in school, you might be able to get away with 3-6 months for now. The whole point of these savings is that they're available immediately in case of emergency -- you don't want to invest it in something that could lose 50% of its value in a week or take 5 days to close out and get you your money.
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Mar 8, 2012 11:58
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That makes sense. I have enough for ~18months, with some extra on top of that, but I'll just keep it in there for now. I currently live in the midwest but this summer (and hopefully after graduation) I'll be living in CA, where I anticipate things to cost more in general. Thanks!
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Mar 8, 2012 16:07
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Fuschia tude posted:You absolutely should keep an emergency fund. Rule of thumb is ~1 years' worth of expenses (18 months is more conservative), though if you have as little income as it seems being in school, you might be able to get away with 3-6 months for now. The whole point of these savings is that they're available immediately in case of emergency -- you don't want to invest it in something that could lose 50% of its value in a week or take 5 days to close out and get you your money. It would take me 5 years to save 18 months' income. How does anybody pull that off?
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Mar 8, 2012 16:17
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LeftistMuslimObama posted:It would take me 5 years to save 18 months' income. How does anybody pull that off? Not, income -- expenses. If you found yourself out of work tomorrow, do you have the savings to not be destitute for X months. And 18 months is the super conservative version. You'll often see suggestions of 3, 6, or 12 months, depending on the person.
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Mar 8, 2012 16:20
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LeftistMuslimObama posted:It would take me 5 years to save 18 months' income. How does anybody pull that off? As much as everyone wants to get on to the retirement savings bus it is important to first establish liquid savings first. The worst thing someone can do is liquidate their retirement savings in order to pay expenses, the amount of loss incurred is huge.
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Mar 8, 2012 17:36
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devilmouse posted:Not, income -- expenses. If you found yourself out of work tomorrow, do you have the savings to not be destitute for X months. And 18 months is the super conservative version. You'll often see suggestions of 3, 6, or 12 months, depending on the person. After paying all of my expenses I literally have enough left that if I saved every bit that is left it would take me 5 years to save for all of my expenses. After I finish paying off the credit cards I foolishly opened in college the outlook might be slightly better, but it will be more than a year just to do that. I'm only putting the money in my retirement savings because it's a pitiful amount off of each check and I don't want to lose on the employer matching, and it lowers my taxable income enough to make it worth it.
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Mar 8, 2012 21:22
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This may be more appropriate for the budgeting thread, but it seems relevant at the moment. I'm reading Elizabeth Warren's "All Your Worth". She recommends that you take your Take-Home Income (after taxes, before any retirement contributions) and structure your expenses as follows. 50% Needs (Housing, utilities, basic food, contractually obligated payments like student loans and car loans, etc.) 30% Wants (Luxury levels of food, cable/internet, buying things, etc.) 20% Debt Payment (excludes mortage/car payment/student loans, which are contractually obligated and therefore Needs) Order of priorities is: 1. Get or keep your expenses in these ratios every month 2. Use your 20% category to build up $1,000 to help avoid additional debt 3. Use as much of your 20% category as you need to in order to get full employer matching. 4. Use your 20% category to wipe out your debt (excluding mortgage/car/student loan) 5. Once 4 is completed, use your 20% category to build up 6 months' worth of Needs (not 6 months of take-home pay) as an emergency fund, because if you have an emergency you will want to cut your monthly expenses to the bone (to just the basic Needs). 6. Use that 20% to invest as you see fit
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Mar 8, 2012 21:48
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Lt Moose posted:That makes sense. I have enough for ~18months, with some extra on top of that, but I'll just keep it in there for now. I currently live in the midwest but this summer (and hopefully after graduation) I'll be living in CA, where I anticipate things to cost more in general. Given your situation, I would probably use some of that 18 month security blanket to max out your Roth contributions for 2011 and then for this year. You can still pull out the principle of a Roth penalty-free so it can be a pseudo-emergency fund if need be. Since the Roth is a use it or lose it proposition, I think you're better off getting as much as you can into it if the funds are available. Especially at your young age where that has a long time to grow tax-free.
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Mar 8, 2012 22:27
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I would like to offer my heartfelt thanks to the suggested reading section of the OP. Particularly after reading "The Four Pillars of Investing" I now feel confident in the really simple yet effective indexing strategies laid out in the book. I'm also now perfectly comfortable ignoring every piece of advice the insurance company guy (who I was referred to by otherwise intelligent people at work) gave me. Thanks for the unnecessary waste of money whole life and mutual fund with a load rear end in a top hat. Took those off auto-deposit almost as soon as I finished the book. My biggest question regarding index fund investing is ETFs. Most of the Bernstein/Bogle type books recommend Index mutual funds over ETFs based primarily on the transaction fees that exist for ETFs. However, now Fidelity and Vanguard offer their own index-type ETFs with transaction-free trading. Since ETFs are sold by shares they seem to have an advantage over the mutual funds in that there is essentially no minimum investment correct? You could theoretically just buy 1 fund of an ETF if you want? Looking at this helpful site: http://investingguy.blogspot.com/2010/01/comparison-of-vanguard-charles-schwab.html it appears that for Vanguard for example their ETF version of most funds has a better Expense Ratio than the normal index mutual fund (but not quite as good as the Admiral Funds, which unfortunately have a $10k minimum). Am I off base here, or does it make more sense to invest in ETFs until you reach the portfolio level where you can afford Admiral mutual funds?
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Mar 9, 2012 00:51
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Good OP. I'd appreciate some specific advice if anyone has got the time. A bit of background: I am 18, and therefore retarded. I realize that one day I am going to wake up and be 30, and probably want things like a house, a nice car and maybe even a kid. I'd prefer to not then have to say "Wait, gently caress, I forgot. I am a Cornholio and have no money and lots of debt." So, with that said, I would like to start "saving for my future"  I decided to start work straight after finishing high school, and very luckily landed a junior system administrator role that is getting me $750 a week after taxes and superannuation. I'm not sure of the terminology but I believe superannuation is the Australian equivalent of a 401(k)? So for me that means I am automatically saving 10% of my wages for retirement already. Major Weekly Expenses: Accommodation: $0 - Won't be moving out of home for another year. Parents aren't charging me rent, yet. Food: $80 - I pay for about half of my meals. Transportation: $20 - Train tickets to get to work Total: $100 Weekly Income After Expenses: $650 At the moment, my current "plan" (based on very little financial knowledge) is to open a high interest term deposit (5.5%pa is pretty much the best I can find) and, for the time being, drop $400 a week into it. On top of that, I was thinking of opening a savings account (with money I can actually access) and putting $100 a week into that, for more short term saving. The other $150/w is spending money. Is this the right way to go about it? Does anyone have any advice? Perhaps I am better off with some sort of investment plan? Looking at most investment options the returns seem to be only marginally better than the term deposit, but with all the risk associated with investment.
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Mar 9, 2012 03:55
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The Dirtiest Harry posted:At the moment, my current "plan" (based on very little financial knowledge) is to open a high interest term deposit (5.5%pa is pretty much the best I can find) and, for the time being, drop $400 a week into it. On top of that, I was thinking of opening a savings account (with money I can actually access) and putting $100 a week into that, for more short term saving. The other $150/w is spending money. Honestly, your plan sounds good to me. Once you get several thousand stocked away, you might want to diversify some but for now you're good.
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Mar 9, 2012 15:05
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Quick question for you folks familiar with costs and auto investing: I currently have a Roth account with ShareBuilder/ING Direct. I created it for 2011 and it has 5k in it. No funds have been purchased, its just cash at the moment. 5005.00 in it. I'm ready to start buying some funds, likely a set of S&P Index ETF/Mutual funds and am looking hard at Vanguard's offerings due to the low expense ratios. I would like to invest 500/month until its maxed out for this year. By the end of the year (or earlier if I fully fund), I should be able to get some admiral shares, depending on how I invest. When I look at the costs for this, its a little irritating. It seems with ING/ShareBuilder, setting up an auto investment plan and buying 4 funds/month would run me about 12$ (with the 'advantage' plan) per month or so in fees. 2 accounts (me and the wife) = ~300/year. Seems like a lot to pay ING for something so basic. Attempting to invest in the ING funds that have no fees result in bad options with high expense ratios, it seems. Question 1: If I'm looking primarily at Vanguard funds, should I just move this cash over to Vanguard to eliminate the fees? I've called Vanguard and they told me they don't charge to buy funds on an automatic basis, but I'm not so sure there's not a catch. Does anyone know what the fee structure looks like for what I want to do over at Vanguard? I think, since the accounts will have under 10k in them to start, I would need to pay 20$ maintenance fee per year, which I'm okay with until the accounts grow. Question 2: What's the easiest way to move the funds without getting charged fees or tax consequences? The ING support folks say I can do an 'indirect' transfer for free (ING->Savings Account->Vanguard), or a full fund transfer for 75$ per account. They say that the IRS allows one indirect transfer per year. Question 3: What say you, experts? Is this a good idea if I just want some low cost investing on a regular basis, fairly hands off? I already max 401k at work and have obtained advice on which investment splits to use (of course I'm constantly tweaking). Just trying to eliminate fees and go to the lowest expense ratio funds possible.
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Mar 9, 2012 19:08
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dhrusis posted:I currently have a Roth account with ShareBuilder/ING Direct. I created it for 2011 and it has 5k in it. No funds have been purchased, its just cash at the moment. 5005.00 in it. 1) Yes, you should move it to Vanguard. They charge no fees whatsoever* to purchase their mutual funds either on lump sum purchases or automatic periodic purchases. Keep in mind though that you do have to meet the minimum investment amount to purchase the fund initially ($3000 on most funds, $1000 on a few). You won't even have to pay the $20/year fee if you agree to the electronic statement delivery agreement, which just means they won't send you statements and prospectuses in physical mail (other than possibly some tax documents). 2) Go to Vanguard and fill out an account transfer. They will handle most of the details. If ING does charge fees, its possible that Vanguard may pay these for you. Even if ING does deduct $75 from the account upon transfer that you end up not getting back, it would still be worth it to avoid their ridiculous fees (think of it more as saving $225 rather than losing $75). Don't do an indirect transfer if at all possible, because if you somehow screw up you could owe the IRS penalties and/or taxes because they can consider it an "early withdrawal" if certain conditions aren't met. 3) Yes, there is little reason in my mind to use anyone else but Vanguard for passive investing purposes. * Edit: I have to asterik this statement, because there are 2 mutual funds that have purchase fees, but these are fairly specialized funds (All-world ex-US small cap, and All-world ex-US real estate) that you probably will not be planning to purchase. flowinprose fucked around with this message at 20:41 on Mar 9, 2012 |
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Mar 9, 2012 20:31
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dhrusis posted:1) Vanguard does not charge fees if you buy Vanguard funds (which we all highly recommend.) The catch is you have to buy Vanguard funds. The maintenance fee goes away if you sign up for e delivery. 2) Are they saying they want you to dissolve it into your savings account then transfer the funds to Vanguard? You can also do a rollover and have Vanguard take care of it all. When I rolled over with USAA, I signed some paperwork and waited two weeks. Wallah, successful move, no fees paid. 3) Yes it's a good idea. xaarman fucked around with this message at 05:10 on Mar 10, 2012 |
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Mar 10, 2012 05:06
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flowinprose posted:2) Go to Vanguard and fill out an account transfer. They will handle most of the details. If ING does charge fees, its possible that Vanguard may pay these for you. Even if ING does deduct $75 from the account upon transfer that you end up not getting back, it would still be worth it to avoid their ridiculous fees (think of it more as saving $225 rather than losing $75). Don't do an indirect transfer if at all possible, because if you somehow screw up you could owe the IRS penalties and/or taxes because they can consider it an "early withdrawal" if certain conditions aren't met. All the reading I've done seems to indicate that an 'indirect transfer' is for Roth Conversions anyway... since it's Roth to Roth, I'm not sure if this would work. I agree that we're saving 138 (144$ x 2 per year) vs losing 150 (75$ transfer fee x 2 accounts), but my other option would be to just do a one time buy of the funds I want and keep it all in the ING account... Would be less simple to manage, but I'd spend something like 20$ and be done with it. Then I can open a new Roth with Vanguard. Another option would be to do a "partial transfer" of 4999.99 from Ing -> Vanguard, and only pay 15$ per account. Screw these jerks that want to penalize me for moving my money. I guess I'd like to know if indirect transferring is an option for moving from Roth to Roth.
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Mar 10, 2012 16:05
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The Dirtiest Harry posted:At the moment, my current "plan" (based on very little financial knowledge) is to open a high interest term deposit (5.5%pa is pretty much the best I can find) and, for the time being, drop $400 a week into it. On top of that, I was thinking of opening a savings account (with money I can actually access) and putting $100 a week into that, for more short term saving. The other $150/w is spending money. You dont need a term deposit (unless you are worried about using the money since it locks it in)Ubank is offering 6.01% so long as you setup an automatic savings plan of $200 per month. I believe thats the best in the market. You may want to salary sacrifice a minimal amount more into super. I believe its about 15% of your income you want to be putting in for a comfortable retirement. The upside you have is that the government will be changing the law so that super contributions are 12% within the next few years (its going up incrementally by .25% for a few years). If you start now, you'll barely have to contribute anything extra to get the 15% and you'll have heaps of money leftover for house deposit/wedding/kids etc one day. Nice scoring that job as well, awesome work! You'll be rich one day if you follow your plan and dont get into debt with credit cards and a brand new car like most people your age.
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Mar 11, 2012 02:52
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For the Dirtiest Harry Seconding UBANK. Salary sacrifice may work for you. Adding $50 a week adds up over time with compound interest etc. You might also want to look at comparing super funds fees. Have a look at a few calculators. Save by all means but remember to have a life, go to Bali with your mates etc.
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Mar 12, 2012 04:04
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Niwrad posted:You can check and see what funds your credit union offers and what fees they have. But I imagine you won't find a better deal than Vanguard if you're buying something basic like a target retirement fund. Just to follow up, I stopped by my credit union last week and the rate is 1.5% vs the 0.19% of the Vanguard target retirement fund I'm thinking of going with. Thanks again thread for pointing me in the right direction. 
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Mar 12, 2012 21:00
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I'm pretty much completely new to this and looking for some advice. I'm 19 years old and have $7,000 that's currently sitting in an ING savings account. I was introduced to investing in an economics unit last year in high school, thought "Hey, that sounds really smart, I should start doing that now and get ahead of the game," kind of looked into it and forgot about it, and here I am a year later and still haven't made any moves yet. I think it's about time I just jump in, but at this point I'm really not sure what I should be aiming for. Ideally I'd like to start out with $1,000 or so and see where that goes. Should I be putting it into some sort of retirement savings? Most I've looked into on Vanguard have a minimum of $3,000 and that's a little more than I'm willing to go for right now. I'd also like to know what my options are, if any, for more short-term investments (thinking like 3 to 5 years from now but that I could have access to earlier without a huge penalty if necessary). In my economics class today we talked about inflation and the fact that people who let money sit in regular savings accounts are essentially losing money because the interest % doesn't even keep up with inflation, so I'd really like to do a bit more with my money than I'm currently doing. I'm just really unsure where to start and how much of my money I should be putting into which types of investments at this point. Advice is appreciated.
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Mar 13, 2012 04:31
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I figured this would be the best place to ask this, I recently left my employer and I did have a 401k with them, I'm looking to roll it over to Vanguard but my questions is this, I did partially invest in company stock and from what I've read there are taxes that are due if I roll that over into an IRA since it requires the stocks to be sold, is there a way around this? Can I simply hold on to the company stock and rollover the rest?
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Mar 13, 2012 09:04
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Briana! posted:Should I be putting it into some sort of retirement savings? Most I've looked into on Vanguard have a minimum of $3,000 and that's a little more than I'm willing to go for right now. First of all, do you have a job (earned income)? If so you can contribute to a Roth IRA. However for short term savings without penalty for early withdrawal you're pretty much stuck with a savings account. Once you get to the point where you don't need quick access to all of your funds you can start looking at CDs, bonds, stocks and mutual funds.
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Mar 13, 2012 14:23
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So I recently turned 30 and after changing jobs in October my former employer is giving me back my IRA investments (about $500, I wasn't there long). I am planning on putting that money into another IRA for tax purposes, but I'm new to this whole game and I have some questions: I read the Motley fool article about IRAs, but one thing that I don't understand is how an IRA differs from a basic savings account. If I can find a savings account with better interest rate than your average IRA, why would I bother? Speaking of savings accounts, my wife and I have two accounts (one is ING, the other is Emigrant Direct) each with about $2500 in them. We contribute somewhere in the neighborhood of %10 of each paycheck to these accounts. Right now this is used as "emergency" funds and a start on future plans (house/vacation, etc.). While it could be invested, that would take away the easy access in case of emergency. What are the benefits of investing this money over savings? I also just paid off my car, so right now I'm taking that $300/mo and throwing that at my credit card debt. Once I get that below %30 on each card, I can put that into savings/IRA. At about $3600/yr is that a good start? Glancing briefly at the last page or so, I saw several mentions of Vanguard. What is that referring to? I appreciate people taking the time to reduce my confusion in this matter.
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Mar 13, 2012 15:27
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Briana! posted:Should I be putting it into some sort of retirement savings? Most I've looked into on Vanguard have a minimum of $3,000 and that's a little more than I'm willing to go for right now. The Vanguard minimum for a target retirement fund is only $1000 right now I believe. That would be a nice start. But you can't put money in there unless you are making money (if you put $1000 in a Roth, you need to have made at least $1000 in taxable compensation). If you have, I'd probably recommend a Roth IRA as your vehicle of choice. Offers a lot of long term benefits at your age and the principle can still be removed penalty/tax free in case of an emergency. However, I'd still want to have an emergency fund in a high yield savings account (ING, HSBC, etc). This of course depends on your living and income situation. You are correct about inflation, but at the amount you currently have, it's not going to make a big impact. Far better off having some flexibility financially than worrying about a percent or two loss in value. If you could give us more information about your situation it would help us. Either current income, future income, whatever situation you are currently in.
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Mar 13, 2012 15:49
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Briana! posted:I'm pretty much completely new to this and looking for some advice. I'm 19 years old and have $7,000 that's currently sitting in an ING savings account. I was introduced to investing in an economics unit last year in high school, thought "Hey, that sounds really smart, I should start doing that now and get ahead of the game," kind of looked into it and forgot about it, and here I am a year later and still haven't made any moves yet. I think it's about time I just jump in, but at this point I'm really not sure what I should be aiming for. Ideally I'd like to start out with $1,000 or so and see where that goes. You will probably need to access those savings for early life costs (education, car, house, etc.) so I would focus on intermediate term investments where your money is not locked up at all or locked up for a defined period of time. When I first started saving I accumulated an emergency account in cash at a high interest paying online bank. After that I started $5000 x 5 year laddering of GIC (term deposits). So after five years I have 20% of the total balance mature that I can either use or reinvest. After that I started looking at setting aside more long term investments. So essentially I have $15,000 available in case of emergency, $25,000 available for mid-term planned purchases (car, house downpayment, etc) and then more in a long term investment account. I now don't contribute to the emergency fund, contribute $5k a year to the intermediate fund and contribute the rest to the long term fund. Having short and mid-term funds prevents making the worst decision of needlessly buying and selling on the market in order to pay bills or buy stuff. Unless you're day trading you must avoid touching your investment account as the fees will destroy your gains, especially when you're starting out with a small portfolio. cowofwar fucked around with this message at 16:27 on Mar 13, 2012 |
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Mar 13, 2012 16:23
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CzarChasm posted:I read the Motley fool article about IRAs, but one thing that I don't understand is how an IRA differs from a basic savings account. If I can find a savings account with better interest rate than your average IRA, why would I bother? IRAs are not like savings accounts because an IRA is not a cash savings vehicle, it is an investment vehicle provider by a broker (like Vanguard). The "interest rate" is determined by the performance of the investments you buy like stocks or bonds, not a promised rate set and advertised by the bank. Contributions to IRAs also have the advantage of being tax-deductible, so over long periods of time they grow larger from compound interest than non-tax-advantaged accounts. quote:What are the benefits of investing this money over savings? At those amounts? Almost no benefit whatsoever. Treat your emergency fund seriously, because it is not a slush fund and it needs to be there for times of serious and unpredictable need. Keeping 3 months worth of needed funds is risky, 6 months is sufficient, and 12 months or more is conservative. bam thwok fucked around with this message at 16:58 on Mar 14, 2012 |
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Mar 13, 2012 18:15
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CzarChasm posted:I read the Motley fool article about IRAs, but one thing that I don't understand is how an IRA differs from a basic savings account. If I can find a savings account with better interest rate than your average IRA, why would I bother? We mention Vanguard a lot because it's one of the easiest and best places you can invest online yourself, without having to pay fees and expenses like you would at a lot of other brokers (especially traditional B&M brokers).
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Mar 13, 2012 20:01
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2 questions. Please forgive me if they're incredibly dumb (hint: they are). 1) 'emergency' backup: is it ok to consider credit cards an emergency reserve? we have a few grand in the bank, but no credit card debt now and, with good interest rates and very high limits, would plan on using those in a bad situation. Our money now is going to pay off student loans, house/car/medical bills, etc. 2) Aren't 401k and these other retirement options fairly new? I know the whole 'past gains/future returns' thing, so nothing is guaranteed anyway, but how many generations of Americans have retired using these as their income source and how reliable are they long-term? Maybe that question doesn't make sense. I worry a lot about retirement, more than I probably should since I'm only 30.
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Mar 13, 2012 20:10
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Solaron posted:2 questions. Please forgive me if they're incredibly dumb (hint: they are). They're helpful in an emergency, but they're a 30 day loan. Emergency reserves are recommended at 6-12 months. "Good" interest rates are still going to cost you a lot more than you lose out on in >1% interest by keeping cash available. I wouldn't count on a credit card for anything you can't pay for in cash.
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Mar 13, 2012 20:29
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Solaron posted:2) Aren't 401k and these other retirement options fairly new? I know the whole 'past gains/future returns' thing, so nothing is guaranteed anyway, but how many generations of Americans have retired using these as their income source and how reliable are they long-term? Maybe that question doesn't make sense. I worry a lot about retirement, more than I probably should since I'm only 30. They've been around since the late 70s when section 401(k) was added to the Internal Revenue Act, but deferred compensation plans are way, way older than that. 401ks are as reliable as the investments you choose to buy with them. Other than that I'm not sure what your question is?
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Mar 13, 2012 21:26
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So, more questions from someone who is way behind with all this investment stuff. I have more money than I care to admit in a checking account. (To be fair, it's a high interest checking account, but I'm past the maximum for the high rate and they keep cutting the rate too.) On top of that, I recently inherited around $10k from my grandfather. No debt to speak of, but the only invested money I have is ~3k in a 403(b) from work (I've been putting in as much as they'll match). Complicating things slightly is the fact that, starting this fall, I'll be going to grad school and taking a >50% pay cut, but it doesn't look like I'll have to significantly dip into savings. So I figure that now would be the time to put $10k into a Roth IRA. Despite majoring in and teaching math, I have no particular knowledge of or interest in finance, so I'd really just like to be able to do something with the money now and then watch it grow, or not shrink, for 40 years. If I'm opening a Vanguard IRA, should I just be putting the entire $10k in one of their target retirement funds? Is there any penalty to rolling the 403(b) into the same account when I'm no longer getting contributions matched?
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Mar 14, 2012 01:14
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Solaron posted:2 questions. Please forgive me if they're incredibly dumb (hint: they are). 1) The point of your emergency fund is to keep you from doing financially unsavory things if you lose your job. Even "great" CC rates are what, 8-10%? 0% APR before resetting to 20%? Either way those are terrible loans to take out "indefinitely", as you would be doing in an emergency. Your emergency fund is there so you can start on the right track once the emergency is over instead of getting yourself out of CC debt for the next several years. 2) A 401k is just a fancy way to invest in the market. There's rules and regulations and fancy tax breaks, but you're just investing in the market. All the pros and cons to market investing apply and data goes back a lot further than the 70's.
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Mar 14, 2012 01:44
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Handsome Rob posted:So, more questions from someone who is way behind with all this investment stuff. I don't think you can roll your 403(b) into anything as long as you are still employed with them. Not 100% sure on that, but I thought they were similar to a 401k. I think putting $10k into a Roth IRA target retirement fund is a smart idea. There is a limit of $5000 a year though. You can still put a contribution in for 2011 up until the tax deadline in April. So open it up and make a $5000 contribution for 2011 and a $5000 contribution for 2012. If you want to do more than that for retirement, you could also put more into your 403(b) I believe even though your employer won't match. That's assuming you max out your yearly Roth contribution first.
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Mar 14, 2012 03:19
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I'm currently a member of USAA and was considering going with them for a Roth IRA account. I plan on a more hands-off approach and was thinking of putting things into mutual funds. I looked at the cost calculator on Vanguard's website and they seem to have much lower costs associated with their funds compared to similar USAA mutual funds. I'm guessing it makes more sense to open a Roth at Vanguard rather than open one through USAA and then invest it into Vanguard mutual funds?
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Mar 14, 2012 16:01
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Uuudar posted:I'm currently a member of USAA and was considering going with them for a Roth IRA account. I plan on a more hands-off approach and was thinking of putting things into mutual funds. I looked at the cost calculator on Vanguard's website and they seem to have much lower costs associated with their funds compared to similar USAA mutual funds. I'm guessing it makes more sense to open a Roth at Vanguard rather than open one through USAA and then invest it into Vanguard mutual funds? Vanguard offers pretty preferential trade rates on the purchase of its own funds ($0). If USAA can match that for buying Vanguard's funds, then there's no harm in opening your account there. But if they can't match that (and I'm betting they can't) then you have to decide if your customer loyalty is to USAA is worth more than the transaction costs they plan to charge you to buy the funds you want.
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Mar 14, 2012 16:57
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Niwrad posted:I don't think you can roll your 403(b) into anything as long as you are still employed with them. Not 100% sure on that, but I thought they were similar to a 401k. I won't be working there anymore after August. After that, is there any reason to keep the accounts separate?
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Mar 14, 2012 19:39
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Handsome Rob posted:I won't be working there anymore after August. After that, is there any reason to keep the accounts separate? Not really, unless you are in love with the funds they have. Something important though to mention. You had said you'd like to roll this into a Roth IRA. A Roth is post-tax while 403(B) should be pre-tax. That means if you wanted to rollover into a Roth, you'd have to pay taxes on the money in your 403(B) just like income since you didn't pay the taxes on it at the time you recevied it. You can however just roll it into a Traditional IRA which would be treated the same and would not change your tax status at all at this time. So you will have to make a decision on whether having it in a Roth as opposed to a Traditional IRA is worth paying the taxes now. If you are in a comfortable situation financially and your income is going to be low, I'd pay the taxes since your rate will be lower right now and put it in the Roth.
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Mar 14, 2012 22:51
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I have 250 shares of 3M stock. I feel like its probably appropriate to not have all my eggs in one basket. I already have a Roth IRA that I fund as much as I can. Any suggestions on what to do or what information to learn?
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Mar 16, 2012 23:05
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IfIWereARichMan posted:I have 250 shares of 3M stock. I feel like its probably appropriate to not have all my eggs in one basket. I already have a Roth IRA that I fund as much as I can. Any suggestions on what to do or what information to learn? You could sell your 3M stock and put it into a normal vanguard account with a risk/reward mix you're more comfortable with. You won't have the tax benefits of an IRA, but it's better than letting $20,000 sit in a bank account/under your bed/in one company's stock. And if there's some special significance behind the 3M stock you could always keep 1 share for nostalgia.
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Mar 18, 2012 14:59
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Uuudar posted:I'm currently a member of USAA and was considering going with them for a Roth IRA account. I plan on a more hands-off approach and was thinking of putting things into mutual funds. I looked at the cost calculator on Vanguard's website and they seem to have much lower costs associated with their funds compared to similar USAA mutual funds. I'm guessing it makes more sense to open a Roth at Vanguard rather than open one through USAA and then invest it into Vanguard mutual funds? I have my Roth at USAA and invest it mostly in vanguard funds. USAA will charge a one time ($45) commission to invest in the vanguard funds, but once you set up automatic investing in the fund, they charge $0 in fees. So for someone like me who has had vanguard funds in my Roth since 2008, I have paid only that initial $45 in commission/fees even though I put more money in the fund every month. The downside is that if you ever have some additional lump sum money that you wish to stick into your vanguard fund, they will charge another commission. I have been considering moving my Roth to vanguard in order to not worry about the lump sum issue. Although I love USAA, if you are starting out and following the passive investing advice that is the norm here, I would just start out with vanguard from the onset.
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Mar 18, 2012 20:25
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