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Total newbie. Hold my hand! Obviously I have not read the whole thread and I am sorry. But I have been reading a bunch about IRAs and retirement planning. I got a bit lost trying to figure out which firm or type of fund would suit me best, though, so I turn to you folks. I want to start a Roth IRA for retirement. I'm 24 and as a grad student don't have access to any kind of employee plan. Currently, my savings are in an ING Direct Orange Savings account. It has 11k in it at the moment. I intend to keep this account, but I will probably use it to seed the Roth IRA. I'm also about to start orthodontic care, so that will be depleting it unfortunately. I also have $10k in an American Funds account that my mother set up for me in my childhood. I have pretty much no idea how this works or what fees I'm paying. It's in fund AWSHX (Aw, shucks!  ). I'd be willing to use this to seed the Roth IRA instead if it seems like a good idea in terms of fees and such.My "investment style" is as follows: "ohgodhowdidIgethere?!" I can save probably 10% of my income for retirement, and I can handle risk appropriate to my age... but I don't want to put all my money in real estate or movie futures or whatever the least secure thing is. I'd rather not be in charge of the nitty gritty. So, questions 1) What should I do with my American Funds account? Should it stay where it is or would I be better served using it to max my Roth IRA contributions the next couple years? 2) What firm and/or fund would be a good choice for me? Vanguard seems to get a lot of props for low fees. I know there're technically fees for an account balance under $10k, but you can get rid of those by going paperless, it seems. I'm definitely open to other suggestions, although the (apparently?) non-profit aspect is pleasing to me. eta: If I did go with them, would it be better to start with a STAR Fund account (min. $1000) or perhaps the Retirement 2045 thing (changes investments from riskier to less risky as I get closer to retirement), or something else? 3) What happens to your account when you make above the eligible annual income to have a Roth IRA? I gather the allowed contributions go down gradually for 15 or 10 years depending on your marital status, but then what? Do you have to transfer it, or does it just sit there compounding interest until you want to take money out? Eggplant Wizard fucked around with this message at 21:20 on Sep 25, 2010 |
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Sep 25, 2010 21:15
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flowinprose posted:First question: as a grad student, do you have "earned" income? In order to contribute to a Roth IRA you must have at least as much earned income as you are contributing. If you get a w2 from being a TA or something (or if you have a job on the side) at the end of the year then that would count, but I'm not sure that just a grad student stipend qualifies for this requirement. Thanks for the huge and detailed answer  On question 1: Yes, I have earned income on a w2. I'm a TA. This is good to know though, as I'll probably be on not-earned income for the year after next year. On question 2: I just checked on the AF account, and it is an MA/UTMA account. I'm old enough now that it counts as mine and I count its dividends in my taxes. I would talk to Vanguard & AF before moving any of this, just to figure out what the tax issues are. Now more questions from me! 1) In the realm of hypothesis and silliness: basically, I can't put more than my AGI/$5000 (whichever's lower) a year into a Roth IRA, yes? So if I earn $100 of w2 money, I can only contribute $100 that year? Or can I contribute however much I want (up to 5k) from whatever source, just so long as I have a source of earned income?  2) Should I just throw money at my AF account instead? Right now I am getting ~$250 in dividends that get put into the account quarterly. I do not know where to find out about fees. eta: I think I'll let this sit there actually. I can put some money into it in the years when I'm on fellowship/stipend, at least. I think. Unless #2 is the best idea ever, I will probably go ahead with a Vanguard account soon. Thanks again! Eggplant Wizard fucked around with this message at 00:51 on Sep 26, 2010 |
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Sep 26, 2010 00:48
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Leperflesh posted:You're getting great answers, but I have a quick question (since you're a grad student): My student loans consist entirely of $18k federal direct loan. I'm pretty sure it's subsidized (This means they pay the interest, right? I'm pretty it is subsidized, because the number hasn't changed in the time it's been deferred, about 2 years), and it's certainly deferred till I finish grad school (3-4 more years). I'm hoping to be able to save up enough to pay those off pretty much as soon as I get out, or at least within a couple years. flowinprose, thanks so much. I really appreciate the advice. My income is, in fact, well below $34000, so now I know what to look into next. I may see some of you in the income taxes thread :P
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Sep 26, 2010 15:33
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Leperflesh posted:Even so, as soon as you start owing interest, you're looking at something like a 5% guaranteed return on your money for paying that debt. So definitely plan to pay it all off rapidly. If you can invest for retirement and still save to pay those debts, then you're in good shape. My 10% a year saving for retirement number doesn't include the minimum 7% general savings I'm doing as well. I hope to build that up and use it to really aggressively pay off the student loans. As if I'm not loaded enough, apparently I have another trust thing in the UK that I get next year... I'll be back when I hear about that. Anyway, I'm not worried. Another question: So for Vanguard, I'm looking at doing the 2050 Fund for my IRA, and then at flowinprose's suggestion, I will probably also buy an ETF. He suggested VTI, but I already would hold quite a lot of that one as part of the 2050 Fund. Is that still good, or are there others I should consider instead? Or is this a "Keep It Simple, Stupid" moment?
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Sep 26, 2010 19:06
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Thanks for the explanation. I think I'll stick with the relatively simple approach. You're heroes in here, seriously. 
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Sep 26, 2010 21:46
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flowinprose posted:fully fund a Roth IRA from Vanguard and then stick the rest of it in a taxable brokerage account (also at Vanguard) and purchase a Vanguard ETF like VTI. You can then sell shares of VTI in the future if you need to in order to fund your Roth IRA again, or just keep the money in VTI and fund the Roth from your own income. edit: Nevermind, sorted it out with one of their chat representatives. Now I'm properly set to go on with my plans, thanks to you guys. Eggplant Wizard fucked around with this message at 15:03 on Oct 6, 2010 |
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Oct 6, 2010 02:29
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rockcity posted:I'm a 25 year old male looking to finally start a Roth IRA. I've read a lot of the OP along with the Motley Fool article on retirement, all of which was really helpful and sold me on the idea of the Roth. I'm coming into an 8-10k commission check through a big order I was able to get for my company and I'm going to allocate some of that toward starting a Roth IRA. I'm aiming to save up the full 5k to contribute for this tax year and I've been looking into Vanguard and it seems like a lot of their options have minimums around 3k. What is a good way to diversify a starting investment of 5k for someone just getting into retirement savings? I just did this! Take a look at the page before this & the top of this one; I got some really helpful, thorough answers. Eggplant Wizard fucked around with this message at 17:35 on Oct 13, 2010 |
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Oct 13, 2010 17:33
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moflika posted:I should probably educate myself on tax matters before taking this kind of step, but you've got to start somewhere. Speaking of which, could I trust someone from a place like H and R Block to make sure I don't miss anything come tax time if I keep my investments simple, or should I move up in the world and find a better tax person? They can be pretty $$$$... If you are under a certain income level (irs.gov will know), you can use turbotax or H&R block online's tax filing things for free. Well, it's free to file your federal, and $29.95 for state, but it's still a good idea. I am totally ignorant of most things and have real trouble with math, but TurboTax at least makes it really clear where things should go. There're nice question mark buttons next to every field. The Tax Megathread people are also amazing.
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Dec 14, 2010 23:23
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Investments: Roth IRA of Vanguard 2050 Retirement fund, maxed for 2010 Vanguard Individual brokerage account with: - Vanguard Total Stock Market (VTI), initial investment of $6848 - Vanguard Intermediate Term Corp Bond ETF, initial investment of $2098 Other things in case you need to know: - ING direct (formerly high interest  ) savings account with about $7k, this is my emergency fund/longterm savings for stuff like vacations or major purchases. I send $100 a month here, which I should increase but haven't yet.- I am a grad student and I make about $24k a year at the moment. I know I am not saving enough. - I don't have any debt except some deferred, subsidized federal direct student loans of $18k. I won't have to pay those till 2013 or 2014. The Roth IRA I'm leaving alone except to put money in it. I need to max it for 2011 but I will probably do that over the year. I'm an uber newbie and don't really have any interest in learning the ins & outs; I just want to be doing something with the money my parents saved for me that used to be sitting in an mediocre high expense ratio mutual fund. My question is simply, on the brokerage ones, should I be reinvesting the dividends or have them put in my bank account, or in something else? I have them reinvesting in the funds at the moment. The bonds one is only like $1.50 a month, but the VTI is closer to $40. You guys have held my hand and told me what to do before and I'm quite pleased with the results, so thank you.
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Mar 16, 2011 16:53
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defmacro posted:Quick (and probably easy) question. I'm a graduate student with ~10k in savings and I'd like to open a Roth IRA. I already completed my tax return and I want to make sure I'm not doing anything stupid. One thing just in case, from one grad student to another. If you are/were on a fellowship or scholarship in 2011 or 2010, that does not count as earned income. You may not contribute more than each year's earned income to a Roth IRA, so if last year you TA'd or RA'd but only made $3000, even if you had a $20k fellowship, you can only contribute up to $3000.
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Mar 17, 2011 21:07
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Question about asset allocation, and then another less common question. Me: Almost 25, income of $24k before taxes. Deferred student loans ($17k) but no other debt. I have my checking with BoA, a savings account with ING, and a Roth IRA & brokerage account with Vanguard. The Roth is in the 2050 fund. Question 1 My brokerage account has $9000 of contributions in it that come from a fund my mom set up for me as a kid, plus around $800 of growth since I moved it to Vanguard. It is good to have as a backup emergency fund and maybe I will want to use some of it to pay for a car or wedding or trip or to pay off my student loans when I'm finished with my postgrad degree, or god knows what, but I don't really have any specific goals for it. It is in these funds: VGIT ($1022) VCIT ($1081) VTI ($7645) I noticed recently that it is 100% in US assets. I'm one of those people who thinks America's best days are behind it and other countries are going to be the next big guys, so I'm a little concerned that I don't have any international holdings at all. I'm also not necessarily married to my stocks/bonds ratio. If it's not obvious, I'm a pretty hands off investor, and I fall around a 3-4 on the risk scale that Vanguard uses. Any suggestions on how to make it a more balanced portfolio? Question 2 In a month I turn 25. When I turn 25, I gain access to some money left for me by a great aunt... in England. When my brother got his (2 years ago) it was something like 8000 pounds? I know this depends a lot on what kind of thing it's in now, but in general, is it better to keep it there, or should I try to invest it in dollars instead? If not, I'll probably be back in a couple of months asking about what would be best to do with it across the pond.
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Jun 3, 2011 22:27
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syphon posted:Bleh, I opened a Roth about a month ago. I know its a long term investment and I shouldn't be checking it every day, but that poo poo's gone down almost 10% since I opened it. No, you picked the month where there has been a fair amount of panic about the ~debt ceiling~ and there's been a little bit of  going around (plus our economy IS still in the shitter woooooooo yes I know the debt ceiling is only a tiny part of a huge rear end sandwich). By the time you're 65, no one will remember this dip.Unless you picked an ETF on Congressional Efficiency I think you shouldn't worry. eta: Oh drat, mine's been going down steadily since May too. THANKS FOR MAKING ME CHECK, JERK
Eggplant Wizard fucked around with this message at 14:22 on Aug 4, 2011 |
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Aug 4, 2011 14:20
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In the next month or so, I'll be getting a little over $11,000 shortly from a savings account held for me till I turned 25. Accounts currently:
I pay off my credit cards every month and my only debt is $17,500 student loans, deferred for another 2-3 years while I'm in school. So my question is. Of $11k, I'm going to put $2500 in the Roth. I'll probably put another $2000 in the ING Savings just to bulk it back up. What about the other $6500? I'm open to dumping more of it into the ING Savings. If I want to put more in my brokerage account, what would be good funds? Right now I notice I only have US funds and I think it might be good to get some international exposure? I'm pretty hands-off and so I prefer to go with ETFs and mutual funds rather than individual stocks. Any thoughts?
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Aug 5, 2011 16:28
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Oh, I should have said. I'm in grad school, not college. I live on my own & pay rent and all those good things. As a TA I make about $25k a year. If I start repaying my loan now, I'll have to keep doing it, and while I have the cash, I'm not sure it'd be that good of an idea to spend my entire cushion. I'm planning on dumping a bunch of cash into the loan as soon as I graduate though. That is sortakinda what the brokerage account is destined for ultimately. I do not have a car because I don't have the extra every month to make me feel comfortable paying insurance instead of savings. I don't really need one at the moment and walking/biking keeps me skinny!
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Aug 5, 2011 18:35
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Fair enough. Thanks
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Aug 5, 2011 21:38
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Niwrad posted:One suggestion, max out the Roth. Your contributions (not earnings) to the Roth IRA can be taken out at anytime penalty free. So if an emergency does strike, you have easy access to the cash. Since the Roth is an annual "use it or lose it" deal, you'd be missing out on a $2500 contribution this year. Also, the earlier you build that up, the more tax free earnings you'll make over the next 40 years. I am definitely planning to max the Roth and to continue doing so as long as I can (eta: Just did it ). My Roth is my only retirement account so I plan on leaving the money there, but I am aware that I can pull the principal out which is a nice for peace of mind. And thankfully the loan in question is a federal direct subsidized, so there's no interest till I start paying it. Daytrading is so, so not me. I was more wondering whether it'd be good to add money to those funds now since things have gone to poo poo again on Wall St. and chances are good that before I die it'll have recovered a bit. Another 50 years should be enough to get us out of it, right? 
Eggplant Wizard fucked around with this message at 15:39 on Aug 6, 2011 |
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Aug 6, 2011 15:32
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My only loan is subsidized and has stayed at the same amount since I graduated from undergrad. And yeah, pretty much what KennyG said. Also I like having a safety cushion, and if I paid off my loan now, it'd wipe out pretty much all of that. I can only save so much a year on my salary (usually around $3k barring emergencies), so it will take me a long time to build up a cushion again.
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Aug 7, 2011 02:47
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Dazzo posted:I'm 21 and am thinking about starting to do some long term investing, namely investing in a Roth IRA. I was wondering if I could get some advice on what to do. 1. Never too early. 2. Yes, you can sell your shares of the target fund & invest in other stuff instead. A Roth is a Roth, whatever you buy to fill it. 3. Principal  (and you're not the only one here loving that up  ) I would say it's a poor choice to use an investment account as an emergency fund for two main reasons: first, it's risky and if you end up needing money when it's low, you've only hurt yourself; second, it's just not liquid enough-- it takes a couple of days to get your money out, maybe longer.
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Aug 10, 2011 00:02
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Max out the matching, then the Roth. This assumes you have an emergency fund already. If not, you should make one. You can use the Roth to invest in whatever you want; it's a tax qualification more than anything else. If you decide you want to take money out of it, you can remove the principal (but not the earnings) at any time. The only difference between putting it in your personal investment account and your Roth is that you don't have to pay taxes on the money you earn in your Roth (the principal is post-tax though).
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Aug 13, 2011 22:18
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Once you go over the income threshold, it's not like they take your account away. It still sits and accrues tax-free earnings. I would hold on to it actually if possible.
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Aug 14, 2011 02:48
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Lyon posted:I'm kind of at a loss for what to do right now and was hoping for some advice. Quoting your whole post since it's a new page and you might get lost. I don't know about most of it, but there's no reason not to fund your Roth as you go instead of waiting till the end of the year. You can't time the market or anything by waiting or not waiting, and it's a long term investment, so you might as well just do it as you go so that (in good times anyway) your money can have more time to increase in the Roth. If interest rates were decent it would maybe be worthwhile to build it up in SmartyPig first, but as it is, there's no point. For your other savings stuff... I dunno. There's not too many good places for savers who want to grow their money right now Might as well use SmartyPig for your Life fund (marriage/house/etc.) unless you want to go a little higher risk with bonds or something.
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Sep 19, 2011 21:38
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I think this is just a pre-caffeinated question, but indulge me. My holdings are essentially: Other Vanguard Brokerage Account: ~$8ishk in the Total Stock Market Fund, at its year-long high at the moment if that's relevant, plus about $3k in two different bond funds Ally savings: ~$12k at .95% My Roth IRA has about $17k in it from 3 years of contributions  Should I transfer this year's contribution from Ally, or from Vanguard? I guess the difference is that if I take it from Ally, I'm putting more of my assets in a less liquid state, whereas if I transfer from Vanguard, I'm keeping the same amount liquid, but may have to pay gains taxes. I don't mind paying taxes on earnings but I would like a second opinion.
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Jan 13, 2013 18:01
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Rurutia posted:How hard is it to liquidate Roth IRA thought? I'm with Scottrade, so for me it's simply a 'sell, transfer back' up to the total principle amount, which really doesn't take that long. You take no tax hit at all this way. In the end, I think it is more about how much cash (in terms of risk/variability) you want as apart of your allocation. I have virtually all of my emergency savings in my Roth because of this. It's still a market account, which means it could disappear easily enough. I also no longer consider it money I'm allowed to touch once I've put it in there. Thanks for the advice folks
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Jan 14, 2013 03:20
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