Author Topic: ira and 401k investing  (Read 4055 times)

blackjack

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ira and 401k investing
« on: December 14, 2013, 08:51:27 AM »
(still trying to learn and figure this out)
I started a roth 401k but thinking if its worth starting a roth ira via vanguard...
Should I only open a IRA if i'm able to max out my 401k? If i'm unable to max out my 401k is it worth to start a ira too?
also does anyone have a link to see whats best to invest in via vanguard roth ira?
Also whats the minium amount to invest in vanguards roth IRA?

"buying a conservative dividend-paying stock index fund go to Vanguard.com and start an account to buy some units of the VFINX fund, or if you have a brokerage account you can buy SPY shares."
Does this mean starting an IRA or is this something different?

« Last Edit: December 14, 2013, 09:33:55 AM by blackjack »

matchewed

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Re: ira and 401k investing
« Reply #1 on: December 14, 2013, 10:41:18 AM »
Is your 401k through an employer? If so then you can and should do an IRA as well.

Depending on your goals and strategy you can choose either Roth or Traditional for either investment vehicle.

What is best to invest in depends on your particular asset allocation. Your asset allocation, what investment vehicles you use, and whether they are Roth or Traditional depend on your investment policy statement (you should have one).

Minimums will depend on the investment and the investment class. For Vanguard their ETF's have no min, their investor shares have a 3k initial min usually, and their admiral shares a 10k initial min usually.

That statement you quote is just about buying shares, it is regardless of what investment vehicle you use.

I think you need to sit down and read some books on this subject, do a forum search for investment beginner books, there's been tons of topics on it. Or for the quick and dirty (and good) see the jlcollinsnh series on stocks.

Woodreaux

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Re: ira and 401k investing
« Reply #2 on: December 14, 2013, 12:49:49 PM »


I think you need to sit down and read some books on this subject, do a forum search for investment beginner books, there's been tons of topics on it. Or for the quick and dirty (and good) see the jlcollinsnh series on stocks.
[/quote]


Thanks for posting this link to the jlcollinsnh investing series page. This is great!

blackjack

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Re: ira and 401k investing
« Reply #3 on: December 14, 2013, 04:17:58 PM »
so u can buy funds and not have them linked to an ira or 401k, basically buy the VTSAX and cash out whenever you want, is this what you buy after you max out 401k + IRA?
you buy things like VTSAX, etc

« Last Edit: December 14, 2013, 04:20:05 PM by blackjack »

Woodreaux

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Re: ira and 401k investing
« Reply #4 on: December 15, 2013, 04:09:36 AM »
so u can buy funds and not have them linked to an ira or 401k, basically buy the VTSAX and cash out whenever you want, is this what you buy after you max out 401k + IRA?
you buy things like VTSAX, etc


that's the way i understand it to be. This would be considered your taxable account. You draw off the dividends that this account provides for your "income".

blackjack

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Re: ira and 401k investing
« Reply #5 on: December 15, 2013, 08:59:40 AM »
thanx.... Im not even close to maxing out my ira and 401k yet but im working on it....

I want to start a IRA via vanguard but waiting until i have a few thousand saved....

I just started reading that collins website thats a gold mine of information, i'll spend much time on that learning

is a taxable account the same as brokerage account?

« Last Edit: December 15, 2013, 09:57:38 AM by blackjack »

matchewed

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Re: ira and 401k investing
« Reply #6 on: December 15, 2013, 11:01:23 AM »
Yep

ShavinItForLater

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Re: ira and 401k investing
« Reply #7 on: December 15, 2013, 11:07:46 AM »
The term brokerage account generally refers to an account that lets you buy/sell stocks and ETFs (exchange traded funds) which are mutual funds packaged up to trade like stocks.  SPY is an example of an ETF.  You could have a mutual fund account with Vanguard that is not a brokerage account--one that let you buy/sell mutual funds but not stocks.

Taxable is generally a term that refers to investment accounts that are not tax-advantaged in some way, generally retirement accounts like 401ks, traditional and Roth IRAs, 403bs, etc.--something that has a tax benefit, which generally also has some kinds of restrictions on how and when the money can be withdrawn.

If your employer matches some of your 401k contributions which is common, then generally you'd want to contribute up to the maximum amount that they match.  What that means is that your employer contributes to your 401k account up to some level to match some or all of what you put in.  If you don't invest up to that amount, you lose whatever they would have matched.  For example, my employer matches 50% of up to 6% of my pay, so if I contribute 6% of my salary, they contribute 3% of my salary as well.

A common downside of some 401ks is that they may not be with a low cost provider like Vanguard, so the expense ratio for your fund choices may be a lot higher than a Vanguard or Fidelity IRA with index funds.  Usually the match is worth enough to offset the downside at least up to the maximum level for the match.  Beyond that level, it may be better to use the IRA, until you reach the IRA maximum limit.

Vanguard has at least some funds that don't require a big investment up front to start.  For example, their STAR fund (VGSTX) has only a $1,000 minimum, while most other funds have a $3,000 minimum.  You can switch funds whenever you want.

Siamond

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Re: ira and 401k investing
« Reply #8 on: December 15, 2013, 11:44:23 AM »
Clearly, you need to read some investment literature as the other posters advised. This is the best investment you can do, educate yourself about it, as early as possible.

I would add that you should probably open a roth-IRA soon and put a modicum of money though (no minimum). In the future, you might be in a better position salary-wise, be able to save more, yet... no longer be eligible to open a roth-IRA (an annoying situation in which I am presently)! If you opened a Roth in your early years, you'll be happy by then. In general, can't go wrong with Vanguard...

Once you have both 401k and IRA and a brokerage (taxable) account, yes, a good rule of thumb is to contribute in this precise order. IRAs are flexible, if you can't contribute one year, this is fine, no worry.

blackjack

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Re: ira and 401k investing
« Reply #9 on: December 15, 2013, 01:26:31 PM »
My 401k has no matching