Author Topic: Options for wife's IRA?  (Read 930 times)

el_beardo

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Options for wife's IRA?
« on: April 06, 2013, 09:27:34 PM »
Based on the tax advantage we decided to open an IRA for my wife. We will get a 2k refund for the 5k we put in.

We're both 36. I have 25k in a Fidelity IRA and 110k in my employer's 401k. I will contribute the max 17k ( same as last year)

My wife does not earn any income, but does a great job staying home with the kids.

If I go with Fidelity for the IRA what funds should I invest in?

Any other options besides Fidelity?

These are our only investments besides our home mortgage and a rental property.

We are investment newbies, any suggestions?


icefr

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Re: Options for wife's IRA?
« Reply #1 on: April 06, 2013, 10:20:34 PM »
I will contribute the max 17k ( same as last year)

Pssst you can put in $17,500 this year!

If I go with Fidelity for the IRA what funds should I invest in?

Well what do you have in *your* IRA?

Another Reader

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Re: Options for wife's IRA?
« Reply #2 on: April 07, 2013, 06:56:22 AM »
Fidelity is fine.  They have a number of good quality actively managed mutual funds or if you prefer indexing, check out their Spartan index funds.  There are excellent fund research tools at the Fidelity site.  For any fund, I look at the hypothetical growth of $10,000 chart and numbers to get a feel for the compound rate of growth and the volatility.  The fund minimums are typically $2,500, so pick one or two.  If your wife is not knowledgeable about investing, now is the perfect time for her to learn.

They also have portfolio analysis tools for asset allocation.  If you put in all the fund holdings across all your accounts, you can see where you are invested.  If you are considering your wife's IRA as part of the larger family portfolio, this tool will allow you to see the "big" picture.

GreenGuava

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Re: Options for wife's IRA?
« Reply #3 on: April 07, 2013, 09:01:14 AM »
Fidelity isn't a bad choice - many here are Vanguard fans (I certainly am), but I'm not going to panic and tell you to pick a different place the way I would if you were with, say, Edward Jones.

Assuming you and your wife are planning to stay together for a while, don't think of each retirement account - your 401(k), your IRA, her IRA - as a separate thing;  reasonable people (here and on other forums) disagree as to whether or not the tax-advantaged and taxable accounts should be treated differently.

In short, use your IRA and her IRA to make up for shortfalls in your 401(k), or to take advantage of great choices in said 401(k).  For example, if your employer plan offers a great domestic stock fund (such as a Vanguard institutional index) and mediocre choices elsewhere, you could fill your 401(k) with domestic stocks (up to your desired asset allocation) and use your IRAs for international stock and bonds.

So... what are the good (or least bad) parts of your 401(k) and what is your desired asset allocation within the tax advantaged accounts?
I could settle for a less than ordinary life, but I feel like I was meant for something better.

el_beardo

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Re: Options for wife's IRA?
« Reply #4 on: April 24, 2013, 12:59:01 AM »
In short, use your IRA and her IRA to make up for shortfalls in your 401(k), or to take advantage of great choices in said 401(k).  For example, if your employer plan offers a great domestic stock fund (such as a Vanguard institutional index) and mediocre choices elsewhere, you could fill your 401(k) with domestic stocks (up to your desired asset allocation) and use your IRAs for international stock and bonds.

So... what are the good (or least bad) parts of your 401(k) and what is your desired asset allocation within the tax advantaged accounts?
That is a good idea on treating it all as a whole.

In my 401k I started worrying about the fees - I had some funds that were at 1%, and performance was very similar to the index funds so I switched my elections around o target low fee index funds.

Asset allocation is currently around 25% international, the rest is in US stocks: 50% large, 20% mid, 3% small

I would like to even out the large and small cap funds. I could use the IRAs to move rebalance the US stocks