Author Topic: Roth IRA not traditional, right?  (Read 2018 times)

Ladychips

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Roth IRA not traditional, right?
« on: July 07, 2016, 07:51:12 PM »
I read MDM's response on another thread of the order in which to distribute money.

I have a decent emergency fund.
I don't have any debt at greater than 5%.
I'm maxing out my 403b (I'm one of those dying breeds with a pension).
I don't qualify for an HSA.
So the next item is an IRA.  My husband and I make too much money to qualify for a tax deduction on a traditional IRA.  So, a Roth IRA is the answer, right?

And then the next question is what to invest in.  My 403b is in VTSAX.  Should I do the same with the Roth (although it will be in the not-admiral-shares-version until next year)?  I plan to retire in 6 years.  All my invested money is in stocks...no bonds (because I read that my pension serves the function of bonds in my portfolio...which makes sense to me...of course calculus made sense to me...until after class when I had to do my homework...

I appreciate any advice you would share.

seattlecyclone

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Re: Roth IRA not traditional, right?
« Reply #1 on: July 07, 2016, 08:30:26 PM »
Yes, if you're maxing out your workplace retirement account an IRA is a logical next step. You might prefer to contribute to traditional based on your tax bracket, but if Roth is your only option because of your income then that's better than nothing!

As to what you should invest in, I recommend writing up an "investment policy statement" (search for that term elsewhere on the forum for more info) that basically says how much of your investments you want to have in stocks, bonds, US, international, other asset classes and why. Once you've done that, the choice for how to invest the next dollar should be pretty obvious: look at where your current investments are out of whack with what your ideal asset allocation is, and put more into whatever is falling behind.