Author Topic: Just getting start - advice please  (Read 3014 times)

want2learnmore

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Just getting start - advice please
« on: June 02, 2016, 08:22:05 AM »
Hi there, loving the website and forum - lots of good advice. Just not sure how to apply it to myself!
I want to maximize pre tax savings -
Currently giving 10% into my 401k with 100% employer match up to 8% of my salary, they also give a retirement bonus at bonus time each year
Contributing to a HSA also

have 3 kids - just learning about a college savings plan - don't like the chance it could lose value as its based on the market and the pre-paid version seems to be state specific (live in TX, kid will probably go to school in OK).

Starting looking at post tax investments also - index funds mostly, but I'm scared to actually pull the trigger and start contributing a small amount each month. Any advice on how to get over the nerves?

I can give other details if needed, just ask away! not sure what I am missing.

ooeei

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Re: Just getting start - advice please
« Reply #1 on: June 02, 2016, 09:55:59 AM »
Hi there, loving the website and forum - lots of good advice. Just not sure how to apply it to myself!
I want to maximize pre tax savings -
Currently giving 10% into my 401k with 100% employer match up to 8% of my salary, they also give a retirement bonus at bonus time each year
Contributing to a HSA also

have 3 kids - just learning about a college savings plan - don't like the chance it could lose value as its based on the market and the pre-paid version seems to be state specific (live in TX, kid will probably go to school in OK).

Starting looking at post tax investments also - index funds mostly, but I'm scared to actually pull the trigger and start contributing a small amount each month. Any advice on how to get over the nerves?

I can give other details if needed, just ask away! not sure what I am missing.

I would recommend http://jlcollinsnh.com/stock-series/ for some reading on stocks. 

For getting over your nerves, it might help to think about inflation.  Currently any money you have in a savings account is LOSING spending power constantly due to inflation.  With that being said, you need to be thoughtful about your investing and ensure you've got the correct timelines in mind.  Investing should be for longer term money, and there's nothing wrong with having a big chunk of cash if you've got a plan for it in the moderately near future.

JustTrying

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Re: Just getting start - advice please
« Reply #2 on: June 02, 2016, 06:45:22 PM »
We don't know your income, but I'm going to assume you make less than 180,000, in which case the most obvious way to maximize pre-tax savings would be to max-out your 401k, which would mean contributing $18,000.

I'm no expert about college savings, but I did learn that though 529s ARE state specific, you actually can sign up for them in any state you want and most of them can be used in any state you'd like. I live in WA so since we don't have a state tax, there's NO advantage to me using our state plans. For you, there may be some particular advantage to using a TX plan. You'd have to look into your particular options in TX, but I think there's a good chance that you could sign up for Texas 529 and use it in another state. You'll have to research it to find out if this is true though!

want2learnmore

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Re: Just getting start - advice please
« Reply #3 on: June 03, 2016, 12:24:50 PM »
Thanks, something I did just yesterday was calculate how much I would be contributing towards my 401k and it fell short of $18k, so I bumped it up!

MDM

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Re: Just getting start - advice please
« Reply #4 on: June 04, 2016, 03:42:48 PM »
Consider maximizing
- 401k (or equivalent) for each wage earner
- IRAs for each adult
- HSAs (for each covered by an HDHP plan)
...before doing any 529 plans.

Choices

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Re: Just getting start - advice please
« Reply #5 on: June 04, 2016, 04:09:05 PM »
For extra retirement savings, also consider a Roth IRA. If your income is too high to contribute, that's actually a wonderful thing because you can do the back door Roth.
1. Contribute post-tax dollars to an IRA.
2. Convert this to a Roth IRA. Since you've already paid tax (it was post-tax money to start with), there won't be any additional fees and in the Roth all the earnings will also be tax-free.

For college savings, it depends on your timeline. If your kid is 6 yrs old, then you have a minimum of 12 years before you'll need the money and index funds n a 529 are a great bet. If your timeline is 1-2 years, then a money market will help you avoid volatility but you won't earn much interest.

Do you also have your 401k invested in good index funds?

want2learnmore

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Re: Just getting start - advice please
« Reply #6 on: June 06, 2016, 02:29:11 PM »
define good I guess?

I recently adjusted away from my target 2050 fund and this is the allocation that morning star gave me based on my age, risk tolerance etc

Bonds 5%       cost 0.09%
S&P 500 index 38%    cost 0.01%
Growth Stock 9%      cost 0.06%
International stock 28%       cost 0.02%
Mid & Small Stock 20%       cost 0.02%


So I am guessing only the 500 is an index funds?

MDM

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Re: Just getting start - advice please
« Reply #7 on: June 06, 2016, 02:42:53 PM »
I recently adjusted away from my target 2050 fund and this is the allocation that morning star gave me based on my age, risk tolerance etc

Bonds 5%       cost 0.09%
S&P 500 index 38%    cost 0.01%
Growth Stock 9%      cost 0.06%
International stock 28%       cost 0.02%
Mid & Small Stock 20%       cost 0.02%

So I am guessing only the 500 is an index funds?
With those costs, it is likely that all are index funds.  Do you have ticker symbols and names for each?

Using individual funds probably gets you lower cost than using the target date fund.  That's good - if you don't mind doing your own rebalancing to maintain your desired asset allocation....

Fishindude

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Re: Just getting start - advice please
« Reply #8 on: June 06, 2016, 02:54:42 PM »
Get yourself in good financial shape and prepped for retirement first before worrying about kids college.
Kids college is something that you may / or may not be able to realistically afford.   They can get it done without you if their heads are in the right place.

want2learnmore

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Re: Just getting start - advice please
« Reply #9 on: June 06, 2016, 02:59:46 PM »
I can't seem to find a symbol for them... they are managed by morning star and through my employer, so maybe it is private and don't have a symbol? I'm not sure. Or I am not very good at finding the symbol where I see all of my investments

and on College.... yeah I think College education needs to and will change in the next 10 years, right now the return on investment in college just isn't happening for so many people....

AlwaysLearningToSave

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Re: Just getting start - advice please
« Reply #10 on: June 06, 2016, 03:03:54 PM »
Get yourself in good financial shape and prepped for retirement first before worrying about kids college.
Kids college is something that you may / or may not be able to realistically afford.   They can get it done without you if their heads are in the right place.

+1.  The best financial gift you can give your kids is to take care of yourself financially.  Do not set money aside for them unless you are set yourself.  They can work or borrow money to pay for school.  You cannot borrow money to pay for your own retirement. 

MDM

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Re: Just getting start - advice please
« Reply #11 on: June 06, 2016, 03:51:12 PM »
I can't seem to find a symbol for them... they are managed by morning star and through my employer, so maybe it is private and don't have a symbol? I'm not sure. Or I am not very good at finding the symbol where I see all of my investments
In that case there is a good chance they are https://www.bogleheads.org/wiki/Collective_Investment_Trusts.  Their performance should be very close to similar Vanguard funds.