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I wish I started this when I was 18, but I am 28...still youngish I suppose lol. I'm just going to try and max out my roth IRA every year.
Darrell...do you use LifeCycle funds for general investing too....or just roth?
Being 28 is great. I am 34 and started ROTH IRA at 32. I didnt start maxing out 401K until now. Its never to late. Atleast you are learning.
My rules of investing is this:
1. Max 401k to employer match
2. Max ROTH IRA to max
3. If have more money to save, max 401k to $17.5k max per year.
4. If have more money to save, get 6 months emergency fund
5. If have more money to save, pay all debt, student loan or car loan, actually student loan should be first.
6. If have more money to save, save 20% downpayment for future house.
7. If have more money to save, save for cash used car in the future.
8. If have more money to save, do whatever you want to do. You can combine this with step 6.
9. If you don't want to do step 8, just keep on investing in a taxable account. But buy total stock market index, not stocks.
If you do steps 1 thru 3, you will retire in peace and wealthy. Doing step 5 will make daily life easy.
Don't put off taxable accounts for last. They are supremely powerful when used correctly, and should be step 3 in your otherwise good advice. They can defer capital gains to infinity (retirement accounts can't) and pay substantially lower rates on any gains and dividends (retirement accounts pay higher, ordinary income rates).
You are spot on. A good plan puts equities in the taxable account. Save the roths and traditionals for all the things that get taxed at regular rates anyway
gold,bonds,reits ,cd's all get no capital gains break so they should be in the defered account.
if you have none of that then fill up the roth first since the price of admission is the same taxes up front as a taxable account . the roth is never taxed and the taxable account forever taxed.
you can have as much as a 20% bigger bottom line paying attention to details here.
Last edited by mathjak107; 02-19-2013 at 01:28 PM..
Right on. Retirement accounts are best for yield-focused securities. Mine are exclusively bonds and REITs and are about 15% of my net worth. All stocks go taxable.
Retiring with big retirement accounts is not all it's cracked up to be. RMDs + ordinary rates will eventually make up for the taxes saved in working years. I see it happen all the time. It's not the freebie everyone thinks it is.
You are spot on. A good plan puts equities in the taxable account. Save the roths and traditionals for all the things that get taxed at regular rates anyway
gold,bonds,reits ,cd's all get no capital gains break so they should be in the defered account.
if you have none of that then fill up the roth first since the price of admission is the same taxes up front as a taxable account . the roth is never taxed and the taxable account forever taxed.
you can have as much as a 20% bigger bottom line paying attention to details here.
Thanks, but for me thats too complicated and too much thinking. Any extra money goes to taxable account or maybe a 69 Chevy Chevelle. Nice and simple.
If I am maxing out 401k and Roth IRA, any extra money is for vacation and home fix up. Or a 69 Chevy Chevelle. nice and simple.
IMO, maxing 401k and ROTH IRA for husband and wife and not getting high debt is good enough. All that other stuff is just too much work and complicated.
Being 28 is great. I am 34 and started ROTH IRA at 32. I didnt start maxing out 401K until now. Its never to late. Atleast you are learning.
My rules of investing is this:
1. Max 401k to employer match
2. Max ROTH IRA to max
3. If have more money to save, max 401k to $17.5k max per year.
4. If have more money to save, get 6 months emergency fund
5. If have more money to save, pay all debt, student loan or car loan, actually student loan should be first.
6. If have more money to save, save 20% downpayment for future house.
7. If have more money to save, save for cash used car in the future.
8. If have more money to save, do whatever you want to do. You can combine this with step 6.
9. If you don't want to do step 8, just keep on investing in a taxable account. But buy total stock market index, not stocks.
If you do steps 1 thru 3, you will retire in peace and wealthy. Doing step 5 will make daily life easy.
Nice and simple
Darrell, the only issue I have w/this is the emergency fund...if you don't have that, where do you take from in an emergency? the 401(k)? I think if one does not have an adequate EF, they should build it up immediately....(maybe you agree, but just wanted to point it out)
Someone in another forum basically said if I can't spend 4 hours a week looking at investment stuff then I shouldn't be investing period.
4 hours a week. Looking at what for 4 hours a week?
Do you have full time job? I don't spend 4 hours a week. I just enjoy talking about investing and contributing the forum for entertainment. But theres is nothing for me to do, until Dec 2013 when its time to rebalance if needed.
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