After paying off all my and my husband’s student loans over 4% interest, my car loan, and the mortgage enough to get rid of PMI we will have around $80,000 to invest from my inheritance from my grandpa.
Our plan is to increase both of our 401K contributions to the max (still less out of our paychecks than all the loans we just paid off) and to each open a Roth IRA and max it out, leaving $69,000 to invest otherwise this year. Obviously we will also be saving more per month take home but for simplicity sake we will concentrate on the lump sum for now.
I have been doing a lot of reading, on this site and others about what to invest in. My company’s 401K is through Fidelity and actually has some decent funds, with ERs of 0.04% to 0.51% that we are invested in already.
I am leaning toward opening the Roths and a brokerage account through Vanguard. What I can’t seem to differentiate is what kind of funds/stocks/bonds should be distributed through the 401K, the Roth, and the brokerage account.
Currently the 401K is split among a Target 2050 Fund (based on our age of 26), S&P 500 Equity Index, SM/MID Cap Equity Index, Domestic Bond Index, Large Cap equity Fund, Fixed Income Fund and GD Stock Fund. Pretty diversified. The only three I would potentially add to it would be another target fund (for sooner retirement?), the bond plus fund or the international equity index fund. Let me know if you need/want specific ERs or life of fund %. The 401K actually has lots of options but maybe its too diversified now?
For the Roth it seems like the Vanguard Target fund(s) are highly recommended but would we want to do that if we are already in one through the 401K?
Looking at the brokerage account, it seems like it would be good to start with some index funds like the VTSMX and then start some large stable company funds as well.
Please let me know if this sounds like we are on the right track or if we are missing something! Thanks