Hi, first time posting here. I am 27, husband is 26. Bit of background first. We each had average jobs. I worked entry level at a bank and he was a manager of a grocery store. We quit our jobs and went into a business venture that did fairly well and sold it a year later. With the money, we purchased rental properties that sustain us now. My husband also works 2 days a week mowing for a company just for extra cash. We would love to retire early (though semi now, would like to be 100% before normal retirement age, hoping by 40 or so)
I had a 401k which rolled in an IRA after leaving my job. working a bank, the financial advisor did everything and its now at LPL financial. That small amount has continued to decline for 2 years and I am finally ready to do something about it. I do not want a financial advisor anymore, would like to move it to vangaurd and manage it myself.
I have been reading countless blogs and books last few weeks trying to understand investing and what is best for us. Right now, I like vangaurd and index funds. For someone just starting out and learning I want something simple, works for our situation and has good return.
life situation married, no kids - maybe next few years, file joint, late 20s, living in ohio but plan to move in a year or 2 to Florida.
salary $55000 total, after deductions it shows we only made $2000 in 2014. This is mostly rental income and some side jobs
pre tax deductions my IRA $1700, my husband doesnt have any
current expenses monthly
mortgage $641
Cells $70
Rental taxes & insurance $550
Car ins $37
Utilities $150
Grocery $200
Dining out $150
Household $50
Gas $175
Rental repairs $150
Entertainment $25
Misc $50
assets
2008 ford escape $6000
1987 chevy truck $900
6 rental properties (all paid off) $150000
cash - $23000
liabilities
house $65000 left on loan
so to my real questions. I cannot decide what type of account we should have - roth vs traditional IRA.. or are there other options to? Roth has some rules about earned income, I understand rental income is not considered "earned".. so would we even qualify for it?
We also only will have up to $3000 to start with vangaurd (1700 from current IRA plus extra we will add) there are taxable accounts vs tax differed, would one be better then other for us?
For those who retire early, how do you do it before 59 1/2 to avoid penalties? Which account will allow that.
after we open the new account, we are unsure how to invest. We have heard good things about index funds, the VTSAX and S &P 500. I am ok with some risk as I hope for a good return and have awhile until we fully retire. I also like that they seem easy to have, no real maintenance or upkeep.
Any opinions or thoughts? Thanks!