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Well, it is good to have a mix between tax deferred annuities (traditional 401k and IRA's) and those where taxes have already been taken out. I have a bunch of TDA's and I am trying to get more into my Roth options to add more balance. I don't have the option for a company offered Roth 401k, but if I did, I would definitely look to leverage it with at least a 50/50 split.
I understand that you have until April 15, 2015 to make the 2014 contribution. But I've already made it in full.
I'm under 40. My company matches 6%. I put my 6% in a Roth just like outlined in the quote and the company match goes into my 401k. Win/win.
IIRC, Congress uses the TSP. If the law makers use it, it should be good.
Why? If there's any investing lesson we all should have learned from 2008, it's not to freak out over paper losses on your long-term investments.
As others have mentioned, no reason to fret (just yet) over losing money month over month in a retirement account.Raider Nation said:
, I would consider opening up a brokerage account with a discount broker and that may require more active managing as the stock market ebbs and flows. This money should not be earmarked however for retirement, or mixed with Roth funds.
I probably look at mine twice a year if I'm not rebalancing or changing investments.FUBAR said:
Honestly, if you are far away from retirement and are contributing regularly via 401k or IRA contributions, you WANT the market to drop so you can accumulate more shares with your money.
X Infinity +1
Dave Ramsey recommends this also but I think some exposure to bonds is a good idea. Since inception the G fund and F fund have both had returns well above rates if inflation, while also reducing risk. Year to date the F fund has returned better than any other fund but the C fund, and returned 6% in 2008 when stocks crashed.A mix of stock and bonds is dependent on so many things, but having 10 to 20 percent in bonds is always a good balance imo.
Depends on your situation but financial advisers like to say you should have 3-6 months in emergency savings.
Thanks! I like this list and currently do/have all except the the Roth and max out the 401K (we do contribute to get the 401K match, and have an HSA we fully fund each year). Just thinking ahead to next year, we were kinda hoping to start putting some away for a new car, but also discussed contributing to our Roths again (we haven't done so for a few years in lieu of buying rental properties).
After getting the free money from the matching part of the 401(k), I'd change a couple things on the list. First of all, the Roth IRA is your emergency fund. You can pull the principal anytime, and you are out nothing if you have to do so. If you don't need to access it for an emergency, you end up nicely ahead by having money in the Roth IRA. The government limits contributions for a reason--it's such a great retirement option! Until you build a true emergency fund, just maintain that portion of the Roth IRA in cash to avoid unnecessary risk.
I think a lot of financial advisers disagree with this but I'm not sure it's a horrible idea. I actually did this and regret it to some degree, but at the same time I had been contributing since 1995 (rolled over to Roth when Roth became Roth), so I had a lot of principal to work with.
Can you unpack this please, not all that sure I understand what you mean.
Roth as an emergency fund - your point is reasonable, but I'd think of it as a true emergency, not your first step. This isn't your reserves, but your crap hit the fan fund. You don't want to have to sell investments immediately if you lose your job.Doctor Detroit said:
If you make $90k/year, your emergency fund target should be 6 - 9 months (i.e., 1 to 1.5 month per each $10k of salary). If you made $30k, then 2-3 months should be adequate. Not clue where it came from, or it it's reasonable.Doctor Detroit said:
Not sure why income level has anything to do with emergency savings. 6-9 months is a waste of cash, I'd personally never do it. Three months of expenses is fine IMO.
I err on the side of recommending that someone get as much into the Roth IRA as possible. If it's truly emergency money, let it sit as cash. The goal is not to use it. I'd rather have $2k in a Roth IRA as cash than $2k in savings, that's all. As far as size of an emergency fund, you need enough to bridge whatever size gap you may have based on how far you think you can jump. I have no problem with 3-6 months or 8 months, as it's situation dependent.
Using expenses makes sense. I'm just advocating to feed the Roth IRA as much as possible, instead of building a savings account with cash. There's no risk to trying to max it out, provided you leave it as cash. If you have to pull the principle out, nothing is lost.
I personally don't agree, for what it's worth. It comes down to the psychology of it. People have different views on what constitutes an emergency (wife has cancer and needs $ for treatment, vs son has wedding coming up and needs to borrow money). I prefer people treat Roth with the same level of untouchability as 401K.
I'm disciplined, but I can certaintly see your point. I don't set my watch early either, I just arrive on time! Emergency fund is all about risk tolerance, which is different for everyone. I'm not strongly advocating a position, other than take advantage of the Roth IRA as soon as possible.
That makes no sense to me.
I agree with this.
Solid list DD. I would probably put max out 401k limit above saving for kids college for a few reasons:
Applying blanket rules like this don't make any sense. I'm sure a lot of doctors make $200k/year but have craploads of student loans to pay off early on (just an example here). I look at a 3-6 month emergency fund like this - If I lose my job today, immediately cut all non-necessary costs, then multiply times 6.
With a very secure job, I look more into worse case scenario than just expenses. I'm highly unlikely to lose my job without fair warning, but my car could die or other things could go wrong - good health insurance and we rent our home so the risk is lower right now. I have no reason to carry 6 months of expenses in a savings account.
So if your car dies, you're going to pull $ out of your Roth? BTW, I'm not advocating 6 months savings is right for everyone.
How did you come to that conclusion?Tiger Fan said:
IMO, it's nice to have tax-diversified options in retirement, which you'd get with the Roth vs. your current (assuming regular) 401k. You'll also have more control over your investment options with the Roth, as opposed to the 401k where you're locked into your 401k sponsor's investment decisions.
