Author Topic: Starting Vanguard Roth with $2k  (Read 2101 times)

Vic99

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Starting Vanguard Roth with $2k
« on: December 22, 2015, 09:38:04 AM »

My wife and I plan to retire in ~10 years (I'm 45, she's 41).  Annually I make 72K, She makes 102k.

I have 150k in a 403b.  Since adopting more of the mustache way in the last 6 months, I have greatly increased my contributions.  Including the employee match, it is now at $17k/year.

My wife has a 401k with 140k.  She now contributes $17k/year, which includes a 6% match.

We have a 3 and a 5 year old.

I have been aggressively paying down my house and will pay it off in two years.  We have 35k in a money market for some planned house improvements, annual travel to see family in Europe, replacing a used car with another used car soon, and emergencies.  We agree that we can take a few grand from that 35k and each invest in IRAs.

We currently do not have IRAs.  I want each of us to take 2k from our savings and get a Roth IRA going before the year ends.  Assuming we put $1k in each of two funds, what would you recommend we invest in if we want to be moderate to moderately aggressive?  Many thanks.

matchewed

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Re: Starting Vanguard Roth with $2k
« Reply #1 on: December 22, 2015, 09:48:28 AM »
Invest according to your Asset Allocation. That should be predetermined and can, for simplification purposes, be across the board for all your accounts. Take into consideration tax efficiency.

Read the Stock Series.

And write an Investment Policy Statement. This will guide you into how to invest what money where. A blueprint for executing your Asset Allocation.

BarkyardBQ

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Re: Starting Vanguard Roth with $2k
« Reply #2 on: December 22, 2015, 09:55:05 AM »
401k/403b contribution limit is 18k/year.
With your income, you should probably try to defer as much pretax as possible, consider Traditional IRA vs Roth.
Sometimes, those with 403b also have access to a 457b.

http://www.madfientist.com/retire-even-earlier/
http://www.gocurrycracker.com/roth-sucks/

Do you have an option for HDHP & HSA?
http://www.madfientist.com/ultimate-retirement-account/

For Asset Allocation:
https://personal.vanguard.com/us/funds/tools/recommendation
« Last Edit: December 22, 2015, 09:59:20 AM by BackyarBQ »

Physicsteacher

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Re: Starting Vanguard Roth with $2k
« Reply #3 on: December 22, 2015, 10:06:09 AM »
Most Vanguard funds have a minimum investment of $3k. The Target Date funds, however, have a minimum of only $1k so I'd put your and your wife's contributions for this year into one of those. If your goal is moderate, you might consider the Target 2025 fund. Later dates will be more aggressive. Once you have a bit more in your IRA and have done more research, you can always exchange for other funds.

Edited to add: that's assuming you want to do mutual funds and not ETFs.
« Last Edit: December 22, 2015, 10:14:56 AM by Physicsteacher »

MDM

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Re: Starting Vanguard Roth with $2k
« Reply #4 on: December 22, 2015, 08:44:14 PM »
Many good comments already.

Just to clarify one point: the 401k/403b contribution limit for each of you is $18K/year of your own money.  You don't count the employer contributions for this limit.  There is a higher limit, $53K, that includes employer contributions, non-deductible employee contributions, etc., but for the normal 401k/403b contributions you can each contribute $18K/yr for a total of $36K.

And if you have access to a 457, that's another $18K.

Your income is too high for traditional deductible IRAs, but no problem with Roth IRAs: $5500/yr for each of you. for a total of $11K.

Depending on your mortgage rate, you might be better off maximizing your tax-advantaged investments before prepaying the mortgage.

GGNoob

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Re: Starting Vanguard Roth with $2k
« Reply #5 on: December 23, 2015, 07:52:10 AM »
Another point to mention that I didn't see from anyone else...you actually have until April 15, 2016 to make your 2015 IRA contributions. Just an FYI in case you felt like you were rushing.

bacchi

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Re: Starting Vanguard Roth with $2k
« Reply #6 on: December 23, 2015, 09:43:59 AM »
And if you have access to a 457, that's another $18K.

In many ways, this can be the best vehicle for ER savings -- lower this year's income and spread it out over your ER years.