Pre-tax deductions: 3% into a SIMPLE IRA through Fidelity (with 3% employer matching). This is split four ways between Biotechnology, Value Strategies, Industrials and Consumer Staples Funds. Considering maxing this out after the house is paid off, but I would rather put the money into a Vanguard mutual fund rather than Fidelity. I have $6,850 in this currently.
Brake?, welcome to the forum.
See
https://www.bogleheads.org/wiki/Fidelity for Fidelity options comparable to Vanguard.
Also, would you consider maxing the SIMPLE IRA plus a traditional IRA now, instead of pre-paying the mortgage?
Specific Question(s): So right now my plan is to just save as much as possible after my house is payed off. I like my job and the people I work with and don't think I'll have any problem working for another ten maybe even twenty years. My question is - what is the smartest thing to do with my excess money? I've read about traditional/roth IRA ladders and HSAs and all that but I'm still unsure as to which would be most beneficial to me since I don't know when exactly I'll be retiring. I could just dump everything into VFIAX or VTSMX and let compound interest do it's thing - but then I'll miss out on the benefits of tax advantaged accounts.
In the lists below, differences of a few tenths of a percent are not important when applicable for only a few years (in other words, these are guidelines not rules). Also, think SIMPLE IRA where it says 401k. With the 10-year Treasury ~2.2%, these guidelines suggest prepaying the mortgage should be the last thing you do.
WHAT
0. Establish an emergency fund to your satisfaction
1. Contribute to 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
3. Max Traditional IRA or Roth (or backdoor Roth) based on income level
4. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA, swap #3 and #4)
5. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
6. Invest in a taxable account with any extra.
WHY
0. Give yourself at least enough buffer to avoid worries about bouncing checks
1. Company match rates are likely the highest percent return you can get on your money
2. When the guaranteed return is this high, take it.
3. Rule of thumb: traditional if current marginal rate is 25% or higher; Roth if 10% or lower; flip a coin in between (or see
http://forum.mrmoneymustache.com/investor-alley/deciding-between-roth-and-traditional-ira-based-on-marginal-tax-rate/ if you want even more details on that topic.)
4. See #3 for choice of traditional or Roth for 401k
5. Again, take the risk-free return if high enough
6. Because earnings, even if taxed, are beneficial
That being said, I don't know if I'll be retiring at the right time for a traditional to roth ira conversion to work for me.
See
http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/.
Also, can I transfer money from Fidelity to Vanguard without penalty?
Without penalty (i.e., from the IRS)? Yes. Without fee (i.e., from Fidelity)? It depends on your exact holdings.
