Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I have no experience with investing and pretty much don't know what I'm doing. I have one 401(k) that is doing well that I really don't touch or pay much attention to. It's getting bigger and rate of return is in the positive numbers.
A few years ago I started a Roth IRA with $500 and started an after tax automatic deposit from my paycheck. There's about 10k in that account with 2.5k going to a 2025 targeted fund. That was a hip shot purchase since I've seen that that fund did well in the past. (I purchased that about a year ago)
I had another 401(k) that I left behind and decided to roll it into an IRA Rollover account. I'd like to use it for my daughter's education. She's three and I'm currently 57. My wife is 47. The Rollover was 20k.
The biggest problem that I have at the moment is information overload. There is SO much information about IRA's that I find it overwhelming. I decided to drop what I was doing and try to seek information from the streetwise. Which is basically people like you...and you...and you over there.
1. What would be the best way to maximize my efforts for the IRA that's for my daughter's education? If using a Rollover IRA was a bad decision, then sorry, I just didn't know any better at the time.
2. For the Roth IRA and my age would looking at Stocks be silly-risky? What would a 57-year-old with maybe 10 years before retirement do with a Roth IRA like that? What would you do?
It sucks being on the edge of financial ignorance. It really is and I envy people that can grasp and understand economics. Shoot, I still struggle with Quicken. (Not because it's a God awful application)
I do appreciate anyone's constructive criticisms and feedback.
I had another 401(k) that I left behind and decided to roll it into an IRA Rollover account. I'd like to use it for my daughter's education. She's three and I'm currently 57. My wife is 47. The Rollover was 20k.
1. What would be the best way to maximize my efforts for the IRA that's for my daughter's education? If using a Rollover IRA was a bad decision, then sorry, I just didn't know any better at the time.
The rollover IRA was a great decision.
You act like you think you are an idiot. The idiots are the ones NOT creating IRAs or participating in 401(k)s.
In the absence of any particular plan why don't you just buy 1/3rd each of the SPY, DIA,. and QQQ.
Later, if you don't like this allocation, you can do something else.
Another plan could be to copy what mathjak is doing. He seems happy with it. It doesn't sound like you have to be old to do it.
I was hoping some of the more knowledgeable folks would chime in with specific suggestions (such as which account is the best one from a tax standpoint to use for your daughter's education 15 years from now), but since they haven't here ares my suggestions (which are worth precisely what you are paying for them).
Quote:
Originally Posted by MattM1121
1. What would be the best way to maximize my efforts for the IRA that's for my daughter's education? If using a Rollover IRA was a bad decision, then sorry, I just didn't know any better at the time.
I think that decision was smart, because it doesn't tie your hands. Once you're 59 1/2 years old, you can withdraw that money and use it for anything: your daughter's education, paying medical bills, or your own retirement, if needed. The only strings are the taxes you'll owe on the money.
Since you're looking at needing that money in about 15 years, I'd put it in a low-cost fund that's moderately aggressive, similar to what I recommend below for the Roth.
Quote:
2. For the Roth IRA and my age would looking at Stocks be silly-risky? What would a 57-year-old with maybe 10 years before retirement do with a Roth IRA like that? What would you do?
Just because you're 10 years from retirement doesn't mean you're 10 years away from using that money. Since Roths have no RMDs, you could postpone withdrawals for a while to let the money grow. The big question is how much loss can you stand before you panic sell, and if the stock market DID decline for a long time a la Japan in the late 1980s how much of the Roth's principal could you afford to lose? only you can answer those questions. Personally I'd put 60% of the money in stocks and 40% in bonds and let it ride. You could do that by investing it in a low-cost balanced mutual fund that's designed to hold that ratio (such as Vanguard Wellington), or buy an indexed mutual fund or ETF (such as Vanguard Total Stock Market Index mutual fund or SPY ETF) for the stocks and a second indexed mutual fund or ETF for the bonds (such as Vanguard Total Bond Index mutual fund or BND ETF). Or you could just leave it in the 2025 target date fund (although that might be more bond-heavy than is ideal, depending on the glide path of that fund).
And keep contributing to both IRAs if you can afford to do so!
Not sure if saving for your 3-year old daughter's education (15-years) and saving for your own retirement (8-10-years) with the same 401K is the best approach. Do you expect to have a retirement income beyond your 401K?
An alternate possibility might be a pre-paid college fund (529) - in addition to your 401K. Another might be to accelerate your mortgage to a 15-year payoff.
Not sure if saving for your 3-year old daughter's education (15-years) and saving for your own retirement (8-10-years) with the same 401K is the best approach. Do you expect to have a retirement income beyond your 401K?
If you read the OP's post carefully, you'll see he's talking about two different 401k accounts: the main one he still has as a 401k for his retirement, the small one from a previous job he just rolled over into an IRA and is planning to use for his daughter's future education. Plus he's started a Roth IRA which is also on the small side right now. It is a bit confusing on the first read.
OP, another reason using the rollover IRA to fund your daughter's education is a smart move is that it's a retirement account, and I believe parental retirement accounts generally aren't counted as assets when calculating how much financial aid a student will qualify for. The only downside is that you have to continue to earn money from work in order to keep funding it. Once you retire and are no longer earning money from work, you won't be able to contribute anything more to that IRA. So if after you retired you received a windfall such as an inheritance or lottery winnings and wanted that money to be used for your daughter's education, you'd have to put that money into another account.
I never flatter. Usually, I try to be as insulting as possible. That way, the one's with a thin skin pop-out and say "Pick on me!"
Quote:
Originally Posted by Aredhel
So if after you retired you received a windfall such as an inheritance or lottery winnings and wanted that money to be used for your daughter's education, you'd have to put that money into another account.
There are good problems to have and bad problems to have.
For instance, one good problem to have is to be so good-looking that people don't take you seriously.
OP, another reason using the rollover IRA to fund your daughter's education is a smart move is that it's a retirement account, and I believe parental retirement accounts generally aren't counted as assets when calculating how much financial aid a student will qualify for. The only downside is that you have to continue to earn money from work in order to keep funding it. Once you retire and are no longer earning money from work, you won't be able to contribute anything more to that IRA. So if after you retired you received a windfall such as an inheritance or lottery winnings and wanted that money to be used for your daughter's education, you'd have to put that money into another account.
I believe, however, that any withdrawals from an IRA will count as income on the following year's aid application.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
