Investments Advice for Beginner

[BallardStubble]

Hello!

My wife and I stumbled across this blog a couple years ago with $85k in debt. We went from a 5% savings rate to a 68% savings rate and finished paying off our debt last September (Yay!). We now have a mortgage and are finishing up some home renovations/as well as prepping some costs for a baby on the way. We look to be able to start our investments in October. Our combined income right now is $75k (after taxes and health insurance, as I treat that almost as a pay dock more so than a line item expense). Our annual expenses are about $25k, so our investment total is looking to be about $50k annually. I currently do not have any investments in my 401k, beyond what my company provides at 3.5% of my $60k salary (not matching, they just provide it outright).

I've now come to the realization that simply paying off your debt in order of highest-interest rates is a lot simpler than the decisions involved with investing.

So, my question is basically, how should I start? I understand it's a good idea to max out 401k contributions, but should I open up an IRA account on top of that? After the $16k is invested in 401k contributions, should I take the extra $34k annually and throw it at my mortgage, or should I invest that all in Vanguard Index Funds? Once the index fund totals my mortgage total, should I empty my investments and pay off the mortgage or continue to invest in index funds and treat the mortgage as a monthly expense when figuring my Safe Withdrawal rate?

Lastly, I was reading the "How much is too much in your 401k" article on the Roth IRA Escape Hatch Loophole. I couldn't find a confirmation of this online, but does this mean after the 5 year fermentation period, if 30k/annually is converted over, you'd pay taxes for the equivalent of $30k a year income or 15% tax bracket if married and filing together? (I'm in Washington state, so no state income tax). And if this is the case, do you pay taxes after the fermentation period or as soon as you convert the $30k from your 401k to your Roth IRA?

Sorry for the basic questions everyone, I'm definitely a newbie to the investment side of things, but eager to learn!

[Jeremy E.]

Congratulations on all of the successes you've had so far! If I were in your situation, I would max both yours, and your wife's IRA, which will be $11,000, then max your 401k, which is $18,000, and if your wife has a 401k, you can max it too, this will bring your taxable income down $46,000. You can invest the rest towards a Vanguard taxable account or your mortgage. I think the best investment fund is VTSAX, some people also like mixing that with bonds and international stocks. In your 401k, youll be limited by the options within it, just choose the best option. Most people on here say if the interest rate on debt is lower than 4-5% you should make minimum payments over the life of the loan and instead invest your extra money.
When you transfer money from a traditional 401k or IRA to a Roth IRA, you will have to count the money transferred as taxable income for that year, 5 years later you won't have to pay any tax.
I recommend you read the stock series below, you will learn a lot.
http://jlcollinsnh.com/stock-series/

[arebelspy]

I recommend you read the stock series below, you will learn a lot.
http://jlcollinsnh.com/stock-series/

+1!  Best place to start, IMO.  After that, you can move on to the Bogleheads books and such, but that stock series will get you everything you need, in straightforward, clear posts.