Author Topic: Getting Started  (Read 4228 times)

clifford4970

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Getting Started
« on: June 12, 2015, 08:41:41 AM »
Just a few questions here and looking for advice.  Im married, 26 years old, paying for school out of pocket, so 6% is all I can really afford without taking out student loans.

My 401k through my company goes through Transamerica.  I do 6%, and my company matches up till 4%.  I have $14,000 in my 401k.  It was all going into Vangaurd VFFVX (Target Retirement 2055).  I took $10,000 and moved it into Vangaurd VMVAX (Mid-Cap).  Was this a wise move?

I have a Betterment account set up with $50 a week going into that (again, I know, not much). 

I would really like to  start investing more of our savings, Should i continue to go through Transamerica, or should I open an account at Vangaurd?  Put more into bettement?

Sorry for the questions all over the board... just looking for guidance... and not just for you to give me the answers, but Ideas of what I should be researching and learning more about.

Thanks

StockBeard

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Re: Getting Started
« Reply #1 on: June 12, 2015, 09:41:03 AM »
I think the company you choose to put your investments does not matter so much. Vanguard is a favorite because of their low costs, I personally use Schwab.

When you're starting my advice would be: keep it simple! Go with one trusted company, diversify there. I used to have lots of accounts, and now it is painful (and has a cost) for me to regroup everything under a single account.

Too many accounts means additional costs, complexity, there's in general no good reason to want that.

I strongly recommend the boggleheads philosophy if you haven't looked into it yet: https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy

StressLess

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Re: Getting Started
« Reply #2 on: June 12, 2015, 09:58:20 AM »
I'd say the balanced fund is better than the mid-cap fund...if you have index options in the 401k you could use those...if not the target date fund is a good option.

check out bogleheads lazy portfolios while you figure things out:

http://www.bogleheads.org/wiki/Lazy_portfolios


you should be maxing out your 401k first and then doing traditional or Roth or backdoor roth IRA

After that if there is anything left, you do taxable.

Depending on your tax bracket, you are getting almost a 50% return using tax deferred with the match as well as the tax savings...

clifford4970

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Re: Getting Started
« Reply #3 on: June 12, 2015, 12:45:31 PM »
Thanks for the replies and the links!

I will study up.

BarkyardBQ

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Re: Getting Started
« Reply #4 on: June 12, 2015, 01:03:16 PM »
What are your long and short term goals? Do you own a house or want to save for a down payment, you don't want to take a loan from your 401k, so if you need to save some to a savings account consider that.

clifford4970

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Re: Getting Started
« Reply #5 on: June 12, 2015, 01:07:16 PM »
I'd say the balanced fund is better than the mid-cap fund...if you have index options in the 401k you could use those...if not the target date fund is a good option.

check out bogleheads lazy portfolios while you figure things out:

http://www.bogleheads.org/wiki/Lazy_portfolios


you should be maxing out your 401k first and then doing traditional or Roth or backdoor roth IRA

After that if there is anything left, you do taxable.

Depending on your tax bracket, you are getting almost a 50% return using tax deferred with the match as well as the tax savings...


Just a few questions..... You said I should be maxing out my 401k first.  When you (and many others say that) do you mean max out to the point where my company stops matching, or max out to where I will be hitting the $18,000 each year?

I, like many other MMM followers, want to be FI sooner rather than later.  So wouldnt I want to max out my Roth IRA seeing I can withdraw my contributions before 59 1/2 tax free (in case something came up, or I just wanted it)?
Im sorry if these are dumb questions.  I know I have so much to learn and want to soak up as much as possible.

Thanks again.

clifford4970

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Re: Getting Started
« Reply #6 on: June 12, 2015, 01:10:51 PM »
What are your long and short term goals? Do you own a house or want to save for a down payment, you don't want to take a loan from your 401k, so if you need to save some to a savings account consider that.
Short term goals are to get into a house within the next year.  We currently do not have any debt, and right now are only putting money in a regular savings account (wanting to change that).
Long term goals..... Well with my wife and I adopting the MMM lifestyle, and both of us wanting to be retired by 45......... Long term goals are sock as much away as possible.  We havent really set goals for what we want our NW to be because we still have so much to learn and we want to be able to set an obtainable goal by knowing what path/direction we need to take.

matchewed

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Re: Getting Started
« Reply #7 on: June 12, 2015, 01:26:58 PM »
Here are the basics.

Educate yourself with some background on what to invest in, educate yourself in which investment vehicles to use, and write an Investment Policy Statement.

The above is for the longer term goals. Short term goals should be saved for in safe places such as savings accounts.

StressLess

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Re: Getting Started
« Reply #8 on: June 12, 2015, 01:50:01 PM »

Just a few questions..... You said I should be maxing out my 401k first.  When you (and many others say that) do you mean max out to the point where my company stops matching, or max out to where I will be hitting the $18,000 each year?

I, like many other MMM followers, want to be FI sooner rather than later.  So wouldnt I want to max out my Roth IRA seeing I can withdraw my contributions before 59 1/2 tax free (in case something came up, or I just wanted it)?
Im sorry if these are dumb questions.  I know I have so much to learn and want to soak up as much as possible.

Thanks again.

Yes by maxing out 401k, I/people mean put 18k a year.  Also your employer match isn't part of that 18K...  The investments will grow inside of this shelter without ANY taxes on gains until you withdraw.  with your starting age, this is an incredibly powerful vehicle to build wealth.

You can get money out of accounts early by using 72 T + others...my advice would be not to worry too much about the end game right now...

There is an argument to be made for not maxing out the 401k and contributing to a roth after you have met your employer match, but it really depends on your tax bracket and even then, would be great to do BOTH!



BarkyardBQ

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Re: Getting Started
« Reply #9 on: June 12, 2015, 02:07:40 PM »
I, like many other MMM followers, want to be FI sooner rather than later.  So wouldnt I want to max out my Roth IRA seeing I can withdraw my contributions before 59 1/2 tax free (in case something came up, or I just wanted it)?
Im sorry if these are dumb questions.  I know I have so much to learn and want to soak up as much as possible.

Not at all... the forum however, has perfected it's answer, read: https://seattlecyclone.com/accessing-your-retirement-accounts-early-yes-you-can/

clifford4970

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Re: Getting Started
« Reply #10 on: June 12, 2015, 02:08:16 PM »
Here are the basics.

Educate yourself with some background on what to invest in, educate yourself in which investment vehicles to use, and write an Investment Policy Statement.

The above is for the longer term goals. Short term goals should be saved for in safe places such as savings accounts.

Thank you!  This is the kind of information I need.

Also, thank you StressLess!

clifford4970

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Re: Getting Started
« Reply #11 on: June 12, 2015, 02:10:20 PM »
I, like many other MMM followers, want to be FI sooner rather than later.  So wouldnt I want to max out my Roth IRA seeing I can withdraw my contributions before 59 1/2 tax free (in case something came up, or I just wanted it)?
Im sorry if these are dumb questions.  I know I have so much to learn and want to soak up as much as possible.

Not at all... the forum however, has perfected it's answer, read: https://seattlecyclone.com/accessing-your-retirement-accounts-early-yes-you-can/

Thank you for the link!