Backdoor ROTH - what to do with the money?

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Backdoor ROTH - what to do with the money?

Post by floridanurse » Sat Dec 29, 2012 1:32 pm

Hi all,

I just opened 2 ROTH accounts for myself and wife. $5k each put into tIRA then converted to ROTH a couple days later. I wanted to get the contributions in for 2012. Next month I will place another $5k in each tIRA and convert again for 2013. Every year I plan to convert the max allowable for both of us via this method.

So, now I am trying to figure out what exactly should I invest in? It's currently at Fidelity.

We are 38 and 40. All other contributions maxed out. Plus, we are saving beyond that. These funds will be all long term investments. Unsure when we would tap into them, but we are planning to be senior citizens at that point.

I guess the question I'm asking is, what should be my strategy for investment here. My 401k and our other additional savings are all in conservative low fee funds with VG. Our total annual savings is $80k/year. Since we are relatively young, I was thinking about putting this new ROTH money in an ultra aggressive area. I'm comfortable with the risk as it represents a small percentage of our annual savings plus the funds will not be tapped into until we are old.

If I have left out any necessary info, please ask.

Looking for specific suggestions on where to put our money. Thank you for your time.

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Re: Backdoor ROTH - what to do with the money?

Post by sscritic » Sat Dec 29, 2012 1:41 pm

Is there a reason that the 401(k) is not aggressive? Why be aggressive in a Roth when you aren't aggressive in a 401(k)?

I have money, I don't have this money and that money. If I were saving for retirement, I especially wouldn't have this retirement money and that retirement money. Why do you think of your retirement money as having a split personality (now called Dissociative identity disorder (DID))?

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Re: Backdoor ROTH - what to do with the money?

Post by floridanurse » Sat Dec 29, 2012 2:24 pm

I guess to answer your question, I just look at our funds as being at separate institutions and different parts will be utilized at different times in our lives. To Clarify:

my 401k - fidelity.
my roth - fidelity
wife roth - fidelity

savings: VG

I consider our savings at VG the portfolio that we will use to ER. The Fidelity funds (in my mind) are "later in life" funds, or long term investments not needing to be touched for decades, or also, the unknown SHTF (Sh*t Hit The Fan) curve ball no one ever plans for.

Our ideal plan is to require only VG as our source of money. When SS arrives that will just be a welcome bonus. A raise if you will. And lastly, the fidelity funds will be our 'security blanket' so we sleep well at night. We have 1 son, 5 years old, with no more kids in our future. I'd love to leave him a nice nest egg.

We both will ER at 50 when son graduates high school. 13 more years and counting :) I will possibly still work 1 or 2 short days a week for a while since I just absolutely love what I do for a living. Maybe I will just take a summer work contract in Hawaii or something. But otherwise, we plan to be FI by 50. We are both healthy and active, love to travel, and intend to maintain our lifestyle in retirement.

Am I looking at our money the wrong way?

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Re: Backdoor ROTH - what to do with the money?

Post by mhc » Sat Dec 29, 2012 2:42 pm


you are free to look at your money any way you like. Some believe that having many different buckets for different goals is less efficient.

The difficulty with your original question is that your Roth's should not be looked at in isolation. From your last post, it sounds like all of your accounts are for retirement. Why not look at them together? If you want help on the Roth's, you should ask your question in this format:


You can edit your original post.

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