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53 YO single female if that matters . I work in governmental accounting, but I am not investment savvy. I received a raise beginning of the year, then I changed jobs and got a pay increase. Currently using that money to re-pay my emergency fund where I had to buy a new HVAC system. That should be done by the end of the year, then I want to start saving it before I get used to having it available. I will start out putting in $300 or so per month ($3600/yr), and when I pay off my house in 2 years, I will double that contribution.
My 401K at work does not have good returns (nor do I get any employer match), so I want to open an IRA on my own instead. Is it better to put the money in in a lump sum or monthly like I do with my 401K? If the IRA does better, I may stop contributing to the 401K and add that to what I will be putting in the IRA. I've got to do more research, but the plan for now is to open the IRA at either Vanguard or Fidelity, picking one or more of their index funds.
Sorry for the dumb questions, but I am working on my budget for next year while I am waiting out the hurricane, so I'm trying to figure out what to do with the money. Thanks!!!
If your 401k isn't bringing in good returns, then change your investment mix. You can easily do that with most plans. You will run into the same issue with an IRA.
Also, IRA investments are limited to a little over $5k a year. You can put over $18k in your 401k.
Take some time and learn about how to choose investment funds based on your risk tolerance
Very good to start saying the extra money before you increase your standard of living to use it up. We all should do this but very few do.
Look at a ROTH IRA. The money you put in can be taken back out (not earnings) without any penalties. Thus part of your emergency fund could go hear but invest it as an emergency fund not retirement. Go to the IRS site and look up the rules.
Best to invest each paycheck. Otherwise you might spend the money or some other emergency happens and you never put the money in. Have an automatic draft on your checking account if you can.
I try to lump sum my IRA deposits. I think lump sum is better approximately 2/3 of the time. I know whenever I try to to DCA instead of lump sum, I almost always regret it. Without fail, it seems the market just goes up while I'm holding onto cash.
Re-allocate your 401k, it should be doing decently in a bull market. Mine is up 21% alone this year, but mine is an aggressive tech-heavy fund so make sure you can stomach downturns. Since you already have a tax-deferred account, put your money into a Roth. Best of luck.
Re-allocate your 401k, it should be doing decently in a bull market. Mine is up 21% alone this year, but mine is an aggressive tech-heavy fund so make sure you can stomach downturns. Since you already have a tax-deferred account, put your money into a Roth. Best of luck.
Yes, but a Roth IRA invested in the wrong funds can still have poor yields.
I am a NC state govt employee. We don't have a real choice in what to pick for our 401K except using the GoalMaker (# of yrs to retirement plus conservative, moderate, aggressive). Well, you can choose your fund percentages, but they are special ones (NC Large Cap Fund, NC Stable Value Fund, etc), and none of them really do that well compared to the Fidelity and Vanguard funds from what I see.
I know I have higher amounts that I can put in, but I can't afford to max out. I only have the one salary (no spouse/partner/whatever), and I have just only with this new job broken into $60K+ salary (after 25.5 yrs of govt employment). Currently I put $235/mo in my 401K ($150 pretax and $85 in a Roth that I started a couple of years ago when we got a $1,000 raise after a few years of nothing. 6% of my salary automatically goes to our retirement/pension plan. I will get a pension payment aobut 50% of my salary when I retire (hopefully in 2025; I plan on working part time somewhere after retirement for a few years).
Since I'm in such a low tax bracket now, is Roth the way to go with this new $?
53 YO single female if that matters . I work in governmental accounting, but I am not investment savvy. I received a raise beginning of the year, then I changed jobs and got a pay increase. Currently using that money to re-pay my emergency fund where I had to buy a new HVAC system. That should be done by the end of the year, then I want to start saving it before I get used to having it available. I will start out putting in $300 or so per month ($3600/yr), and when I pay off my house in 2 years, I will double that contribution.
My 401K at work does not have good returns (nor do I get any employer match), so I want to open an IRA on my own instead. Is it better to put the money in in a lump sum or monthly like I do with my 401K? If the IRA does better, I may stop contributing to the 401K and add that to what I will be putting in the IRA. I've got to do more research, but the plan for now is to open the IRA at either Vanguard or Fidelity, picking one or more of their index funds.
Sorry for the dumb questions, but I am working on my budget for next year while I am waiting out the hurricane, so I'm trying to figure out what to do with the money. Thanks!!!
I would do monthly deposits to your IRA so you can dollar cost average.
I am a NC state govt employee. We don't have a real choice in what to pick for our 401K except using the GoalMaker (# of yrs to retirement plus conservative, moderate, aggressive). Well, you can choose your fund percentages, but they are special ones (NC Large Cap Fund, NC Stable Value Fund, etc), and none of them really do that well compared to the Fidelity and Vanguard funds from what I see.
I know I have higher amounts that I can put in, but I can't afford to max out. I only have the one salary (no spouse/partner/whatever), and I have just only with this new job broken into $60K+ salary (after 25.5 yrs of govt employment). Currently I put $235/mo in my 401K ($150 pretax and $85 in a Roth that I started a couple of years ago when we got a $1,000 raise after a few years of nothing. 6% of my salary automatically goes to our retirement/pension plan. I will get a pension payment aobut 50% of my salary when I retire (hopefully in 2025; I plan on working part time somewhere after retirement for a few years).
Since I'm in such a low tax bracket now, is Roth the way to go with this new $?
use the employer option over the IRA because you can contribute as high as 24,500 a year where the IRA is limited to 6500. Those numbers are for over 50. If you are under 50 it is 18,500 and 5500 respectively.
As for your choices in the 403b choose 40% Vanguard 500 Index Admiral and 60% DFA U.S. Small Cap. Those are your index funds. One is the S&P 500 and the other is the rest of the US stock market. Put your current balance in that same level 40% to 60%. All your new money should go that way. Good luck. You could use this Vanguard Extended Market Index Admiral in place of the DFA U.S. Small Cap.
****. Didn't see you cannot do that side of the page you sent. Then your options are those same categories I pulled the funds from. Those will have to be the index funds. I still say use the 401k because of the larger contribution limit. It still is the best option. Pick the index funds in the large and small cap at 40% Large Cap Index and 60% Small Cap Index.
Last edited by oldsoldier1976; 09-15-2018 at 02:01 PM..
Reason: correcting my mistake.
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. I work in governmental accounting, but I am not investment savvy. I received a raise beginning of the year, then I changed jobs and got a pay increase. Currently using that money to re-pay my emergency fund where I had to buy a new HVAC system. That should be done by the end of the year, then I want to start saving it before I get used to having it available. I will start out putting in $300 or so per month ($3600/yr), and when I pay off my house in 2 years, I will double that contribution.
