Author Topic: The Best Kind of Problem - so many options to save & invest  (Read 1885 times)

gillstone

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Starting in January we will have our hair on fire debt cleared and be able to start socking away more cash.  I have a 403(b) which I can only place 7% of my pre-tax in which I get a 4% match on (11% total). My wife has a 401(k) with a 100% match of first 3% pre-tax.  We have about 17k in savings, 45k in the above workplace accounts, and 23k in a mix of traditional and Roth IRAs.

Fees and poor investment options make her 401(k) a non-starter for growing the pile of cash, but we do have the following options:

Roth IRAs for both of us with Vanguard (already open)
Traditional IRAs for both of us with Vanguard (already open)
A 457 Plan for myself with low fees and good investment options
Brokerage accounts with Vanguard
Ally Money Market account (already open but will be moving most of it to Vanguard Brokerage next year)

Current estimate and review of projected budget says over the course of 2015 we should have about $22,000 to put away on top of our current $8,500 in annual 401k/403b contributions.  This is estimated to grow as youngest leaves daycare and promotions and pay raises create more opportunity for saving.  I have two dimensions that I need help working out on this awesome problem:

1. We still need at least some cash to be relatively liquid (available within 2 weeks) so we can cover emergencies and upcoming expenses like a new roof. 

2. We plan on hitting FIRE before we turn 50 so we need some put away in places we can reach with minimal penalty before we turn 59 1/2.

My leaning is to put about 8,200 in the 457, 6,000 total in the Trad IRAs, 6,200 in a brokerage and the rest in the Money Market.

Thank you!







wtjbatman

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Re: The Best Kind of Problem - so many options to save & invest
« Reply #1 on: June 16, 2014, 09:28:29 PM »
1) If you feel you need a large emergency fund or just a savings for future expenses, then that's what you should have. Each person has to decide what they need for them and their family.

2) Keep in mind that even a 401k with poor fund options/fees may be worth investing in, simply due to the awesome pre-tax savings and reduction of your taxable income.

3) When it comes to withdrawing money from tax advantaged accounts before age 59 1/2, there are two popular options. The first one is 72(t) or SEPP, the second is a roth pipeline. Check out http://www.madfientist.com/retire-even-earlier/

Overall, there is nothing wrong with your plan. You could possibly tweak stuff here or there, but in the end, only make decisions that will allow you to sleep well at night.

carrytrader

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Re: The Best Kind of Problem - so many options to save & invest
« Reply #2 on: June 17, 2014, 12:47:55 AM »
Just read the fine print and ensure the funds you invest in are low cost funds. In the world where there are sub 1% funds and sub 0.50% for market index funds. No investment should charge you fees higher than that.