kevinwangjk wrote:Hi everyone. I just started my first job this week, and need to make some decisions on my contributions to investment accounts. I do not really have anyone to go for advices, and I need to make the decision by early next week for my first paycheck, so my apologies first for not doing enough studies myself before making a post to ask. Anyways, below is my info:
Status: 22 years old, single, no loan
Income, 100k base with some possible bonuses
Company match: 50 cents to a dollar for up to 6%, so 3% free money
Main questions that I can come up with:
1) How much should I invest in each type of account (401k, roth, IRA, etc.)? I don't actually know much about each of these and I might have even got the names wrong .
2) How should I mix my investments?
3) Any advice is appreciated.
Thanks a lot! And please let me know if you need additional info.
kevinwangjk wrote:Back from work now. Another busy day! Thanks everyone for the new round of advices!
- Watty, your advices sound great! One question about the 2050, as you can see the 2050 I am offered has only 2.16% for 10 years, which is a lot lower than the others. I don't know how much does this matter though.
- BL, the ERs for all target funds are 0.1%, I assume it's low? What's important for a fund? 1, 3, 5, or 10 years?
They probably are a mix of the same funds but just with varying amounts of stocks, international, and bonds. The furthest out years would have the most stocks and be the highest risk as well. So maybe we have been going toward this backward in that choosing an AA (asset allocation) is the most important and should have from your age to age - 20 in bonds, and not worry about the date in a target fund. I only know Vanguard so would probably choose VIIIX, a S&P 500 type fund, and later add bonds and international.
- Bob, this does not really apply to me because I am international. I am still non-resident alien for tx purposes so I won't be able to get those credits .
- nimo956, isn't 56.5k a little too much for me right now? I still need to purchase a vehicle and maybe a house some time in the future.
Is it generally the right idea to put as much money as possible into 401k and Roth IRA, rather than into some saving account? Because even if I withdraw those money before retirement, as long as it's been more than 5 years, even with 10% penalty I will still end up with more money?
Maybe with Roth where only increase would be taxed and penalty applied, but you really should build up some available funds for emergencies to carry you at least 3 months. There is no guarantee that it will have increased at the moment you want to withdraw it, even though it is likely.
Also, seems like my 401k options include EMPLOYEE PRE-TAX and Employee-Roth. I believe this roth is not Roth IRA. Should I just do employee pre-tax on this one?
Yes, but I don't know specifics of returning to your native country and how that would be impacted.
For singles: The phase-out has gone up $2,000. The new phase-out range for 2013 is $112,000 to $127,000, up from $110,000 to $125,000 in 2012.
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