Author Topic: Reader Case Study: Debt Free, now to Invest!  (Read 1768 times)

stereomaster423

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Reader Case Study: Debt Free, now to Invest!
« on: February 18, 2020, 08:13:12 AM »
Life Situation - 37/Male, Single, 114K Gross income, HCOL area in Boston. In the process of refinancing 261K mortgage on a 30 year 3.375% rate. (Current value is $380K). No other debt besides $4,950 student loan debt at 4.410% v (paying back $200/mo)
$24,000 in savings
 
Just started contributing to retirement again after pausing to get debt free...
$500 / month Roth IRA ($4,700 balance in VOO)
4% 403b with 4% company match ($4,000 balance in Vanguard Index funds)
Fidelity Rollover IRA balance $27,350 (FXAIX)

My Question:
I want to begin investing my Roth IRA account into VTSAX, but when I attempt to buy these ETFs, Vanguard site directs me to create a new account?
I'm very new to this selecting the funds to buy, but it seems that I should be able to use my Roth IRA funds to buy VTSAX... is it because I don't have $10,000 available in cash? (I only have like $100 until my next contribution hits at the end of this month). I'm just noticing that the returns are a little bit better than the VOO funds I'm invested in right now.

Let me know if you need additional info, or if I'm missing something here...

Thanks!!


fell-like-rain

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Re: Reader Case Study: Debt Free, now to Invest!
« Reply #1 on: February 18, 2020, 03:23:32 PM »
Your Roth IRA is in an account at Vanguard, Iím assuming? The minimum to invest in VTSAX is $3k, so as long as youíre trying to buy at least that amount, there shouldnít be an issue. Unless youíre looking for VTSAX as an ETF ticker? VTSAX is a mutual fund, the ETF version is VTI, so Iíd just make sure youíre picking the one you want.

Re: the returns, many people would tell you to pick VTI over VOO in order to be more diversified, but you shouldnít chase returns. Otherwise you end up buying high and selling low, which is exactly the opposite of what you want. Better to figure out a desired asset allocation and stick to it.

Also, ramp up your retirement savings! At your income, you should really be aiming to max out all tax-advantaged accounts. I live in Boston too, I know itís expensive here, but filling up both the IRA and the 403b would be just 18% of your gross income. Youíre basically losing thousands of dollars each year in potential tax savings.

ysette9

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Re: Reader Case Study: Debt Free, now to Invest!
« Reply #2 on: February 18, 2020, 10:08:27 PM »
Just a little nitpick: you arenít debt-free if you have student loans and a mortgage. :)

Good luck with your investing. I agree with the comment about maxing out your tax-advantaged space to the extent you can. Also, check out the investment order sticky thread.

https://forum.mrmoneymustache.com/investor-alley/investment-order/

Dicey

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Re: Reader Case Study: Debt Free, now to Invest!
« Reply #3 on: February 18, 2020, 10:46:57 PM »
Just a little nitpick: you arenít debt-free if you have student loans and a mortgage. :)

Good luck with your investing. I agree with the comment about maxing out your tax-advantaged space to the extent you can. Also, check out the investment order sticky thread.

https://forum.mrmoneymustache.com/investor-alley/investment-order/
Hahaha, after reading the headline, I was worried they were going to say they'd paid everything off first and now they wanted to start investing. I was actually relieved and pleased to see a mortgage!

+1 To investment Order Thread and...

Go read JL Collins Stock Series.

ysette9

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Re: Reader Case Study: Debt Free, now to Invest!
« Reply #4 on: February 19, 2020, 07:07:04 AM »
Youíre right. That thought occurred to me too actually.
Glad those two are at low interest rates.

marty998

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Re: Reader Case Study: Debt Free, now to Invest!
« Reply #5 on: February 21, 2020, 01:23:54 AM »
Pay off the student loans with some of your $24k cash that is currently earning nothing? With your income you should save back the $5000 in a couple of months or so.

Rid yourself of the $200 a month annoyance.