SFBayDuck
Footballguy
I've been reading through the thread and had a couple of questions...
I'm 46 years old and have been a W2 contractor since I was 30. I never stayed with one firm long enough to start a 401k. I have a family of 5, so all of my money went to supporting them and not into any financial vehicles. I'm at a point now with a one off to college and another getting ready to go that my family expenses have gone down enough that I feel better about investing. Call me crazy (my wife does), but I always put the family before my retirement. Make sure they had the things I didn't have, then focus on me when I had the opportunity.
I don't plan on retiring early. I see myself working for another 20 years. No 401k plan to join, so looking at opening a Roth IRA. I know little about the market, less about picking the right stocks. I'm considering opening an online account and working my own investments. Or is it better to hire a guy to do that for me? I worked with a guy once in my 20s, but he was a car salesman type of led me into some bad investments. Lost a little then and never went back. Are firms still this way? Are the tools easier now to just jump in and go? I don't mind a little risk, but I'm more averse now than I was back then. Any insights, suggestions?
You don't need a guy. A Target-Date Retirement Fund, or just 3 index funds (domestic, international, and bonds in some mix) inside your Roth is fine. Once it hits a million, then ask if you need a guy.
Pretty much what @Runkle said.
Think of your "extra" money as water filling a series of buckets, so as one is filled it flows down to the next. Some may move one of these up or down a spot or two, but in general:
Maximize any "free money" (typically a 401K match or, a little more controversially, an ESPP. Doesn't sound like these apply to you)->
Emergency Fund ->
Pay off any high interest debts (credit cards) ->
Fund an HSA if you are eligible ->
Max out traditional and Roth IRAs (as income limits allow)->
Max out 401K (again, not an option for you right now) ->
Fund 529 plans if relevant (might be too late on this one if you haven't already, other than there might be a tax benefit to doing so depending on your state) ->
Pay off "medium" interest debt, like auto or student loans ->
Taxable brokerage/real estate, etc
Automate it. Set up automatic withdrawals from your bank to go right to whichever bucket you're filling. The major providers (Fidelity, Vanguard, etc) allow you to set up automatic investment into mutual funds as soon as the funds hit, so you can set it and forget it. Then if you get any windfalls or bonuses during the year, you can supplement this based on the above order of operations.
As for what to invest in, pick 1, 2, or 3 low/no cost ETFs or mutual funds and call it good. Some people with at least 15-20 year timeframes are comfortable with 100% stocks, something like VTI. Others want a little less risk/more diversification, so spread it out like Runkle and @Peggy suggested across three funds or just use a single target date fund which does that for you.