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Wow, thanks! I never knew that. So happy to learn I actually have some money to invest.
Not only do you have $15,000 to invest, it's already invested! Now you need to look first to see exactly what it's invested in, and second whether that investment is right for you. (It probably isn't.)
$15,000 is enough money that you could spread it out between several indexed stock and bond mutual funds or ETFs that could serve as the core for your long-term retirement investments. Then all you'd need to do would be to add to those core funds yearly (after your student loan debt is paid off), and rebalance once or twice a year to keep the ratio between the funds the way you want it as the money grows (say 80% stocks and 20% bonds). This type of investing is as exciting as watching paint dry, but it tends to work very well if you're patient.
Not only do you have $15,000 to invest, it's already invested! ...
$15,000 is enough money that you could spread it out ... Then all you'd need to do would be to add to those core funds yearly (after your student loan debt is paid off), ...
x2
I'd add that it's already invested in a tax-advantaged account that is portable no matter what your job situation.
That's gonna take a lot of sacrifice - especially with $40k student loan debt. You'll also need job skills that are in demand and allow you to earn close to or North of six figures.
I was agreeing with most of your post until we got here. I don't think retiring in your 60s takes a lot of sacrifice if you start young. It's mostly an attitude thing. If you value flexibility and freedom, many people can retire long before their 60s.
But that means you're not living the Standard American Lifestyle of:
--Spending 40% of your food dollars at restaurants.
--Living in a house/apartment that has was more square footage than you really need.
--Buying new cars on credit instead of buying used for cash.
--High health care costs and being overweight partly because of the unhealthy food and supersized portions eaten at above mentioned restaurants.
--Cable TV and expensive cell phone subscriptions
--Spending money on tattoos, alcohol, recreational drugs.
Basically, if people lived more the way that people lived in the 1950s and 1960s (with appropriate technology upgrades like cell phones...but not the $100 a month plan), most would have plenty of savings and could easily retire in their 60s.
Once you value flexibility and freedom, the stuff from the list above goes down several notches in importance.
I do agree, of course, that having a good income helps tremendously. But a lot more can be accomplished on an average income than people admit.
One thing I would do before rolling the $15k over into an IRA is checking out exactly what tax the original poster would pay if she took the money out of the 401k and didn't roll it over. A previous poster mentioned that using the money for paying off student debt was an exception to the 10% penalty. That doesn't seem to be the case when it comes to a distribution from a 401k in terms of any qualified higher education expenses:
And it doesn't look like paying off student loans from any retirement account is a qualified higher education expense in terms of the 10% exception in most cases:
Still - everything depends on the OP's tax situation in a particular year. I'd pick up a copy of Turbotax - plug the numbers in - and see what the tax hit would be (penalty or not). Not only this year - but in years to come.
And before I'd recommend rolling over the 401k into an IRA - I'd want to know what the 401k is invested in.
Overall - the best advice I can give to the OP is to try to maximize her earnings - especially during her younger years. I don't know how old she is - what she does - or what she might be able to do - so I can't comment specifically on this. Robyn
Some pretty good suggestions have been made on page 3. You didn't say how old you are but I'm assuming you are young. If this money you can afford to ride out the market for decades I like the idea of the 2 index funds, total market and international. Vanguard is a great place to go with their low fees. I have done this, I have also invested a good portion of my 401 in Vanguard Wellington as I'm in my late 50's and need the smoothing out of the rough seas by keeping some money in bonds. That's a key, stocks grow higher over time but as you get older you can't afford to have all your money in stocks so bonds are a great way to offset the risk. You may have the time to go all stocks, or if you don't or don't have the stomach for a possible big loss year, then go to the safety of a fund like Wellington. It's great and has very low fees. Not as low as index funds because it is actively managed but still low.
By the way the only difference between a mutual fund and an ETF is that the ETF will have prices going up and down throughout the day, a fund will have one price at the opening of trading then another at the close. In other words they are basically the same damn thing.
...By the way the only difference between a mutual fund and an ETF is that the ETF will have prices going up and down throughout the day, a fund will have one price at the opening of trading then another at the close. In other words they are basically the same damn thing.
Not quite. There are other differences as well (in general):
BTW - what you're saying only applies to open end funds (not closed end funds - which are a different animal). And open end funds are only priced once a day. At the close. Robyn
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