What's Next?

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Topic Author
Capybara90
Posts: 7
Joined: Mon Jul 23, 2018 9:26 pm

What's Next?

Post by Capybara90 »

I just maxed out my Roth IRA for the year and I contribute 6% of my income to my 401K to qualify for my company's matching contributions. Should I open a traditional IRA now or open a Vanguard brokerage account? So far, I have $11,600 in my Roth IRA and approximately $30K in savings. I am also thinking about investing some of my emergency funds in SWVVX for a higher interest rate than my traditional savings account.
Flyer24
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Re: What's Next?

Post by Flyer24 »

You can’t contribute to a traditional IRA because you have already maxed out your Roth IRA. It is a combined limit. Your next step should be to max out your 401k.
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badbreath
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Re: What's Next?

Post by badbreath »

Max 401 k then move to taxable account.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx
car733
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Re: What's Next?

Post by car733 »

no debt?
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Miriam2
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Re: What's Next?

Post by Miriam2 »

Capybara90 wrote: I just maxed out my Roth IRA for the year and I contribute 6% of my income to my 401K to qualify for my company's matching contributions. Should I open a traditional IRA now or open a Vanguard brokerage account? So far, I have $11,600 in my Roth IRA and approximately $30K in savings. I am also thinking about investing some of my emergency funds in SWVVX for a higher interest rate than my traditional savings account.
Where is your savings account? I assume that's your emergency fund. Is SWVVX the Schwab Value Advantage Money Fund? What interest rate will you receive and how easy is it for you to access in an emergency?
soccerrules
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Re: What's Next?

Post by soccerrules »

Flyer24 wrote: Mon Jul 23, 2018 10:17 pm You can’t contribute to a traditional IRA because you have already maxed out your Roth IRA. It is a combined limit. Your next step should be to max out your 401k.
+1
have any high interest rate debt ?
HSA ?

(it appears you may be younger) Keep saving and try to increase the dollar amount or % of salary. If indeed you are younger, you will benefit greatly from the compounding interest and your 50 yr old self will be very pleased as long as you don't spend it.
Don't let your outflow exceed your income or your upkeep will be your downfall.
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ruralavalon
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Location: Illinois

Re: What's Next?

Post by ruralavalon »

More information is necessary.

What funds are you using in your 401k? What are the 4-5 funds in your 401k with the lowest expense ratios? What funds are you using in your Roth IRA? Please give fund names, tickers and expense ratios.

What fund firm is your Roth IRA with?

Do you have any debt? If so what types, amounts, and interest rates?

Is a High Deductible Health Plan (HDHP) offered at work, so that you could use a Health Savings Account (HSA)?

Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

. . . . .

For your emergency fund you can get a better rates on a federally insured high yield savings account or short-term CDs (for rates see www.bankrate.com). Or you could use Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 2.06%.
Last edited by ruralavalon on Tue Jul 24, 2018 4:53 pm, edited 2 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
ETadvisor
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Re: What's Next?

Post by ETadvisor »

Assuming you have eliminated all mid- high interest debt and established an EF, Investment priority should be all tax advantaged space first (401k, IRA, HSA) and then if any left over fund taxable account for investments.
Topic Author
Capybara90
Posts: 7
Joined: Mon Jul 23, 2018 9:26 pm

Re: What's Next?

Post by Capybara90 »

Here is some additional info.

Yes, I have student loan debt of approximately $27K, but I do have a tuition reimbursement check of $5K coming soon. I have 6 month grace period to pay them off since I will graduate in August. I do not carry any other type of debt, however, I would like to purchase a house and a new car within the next 6-12 months.

I just started my job, so I do not have anything invested in the $401K until the next pay period. I put 50% in SWPPX (Schwab S&P 500 Index) and 50% in GTILX (Glenmede Quant US Large Cap Gr Eq Instl).

The roth IRA is with TD Ameritrade and it contains a slew of stocks and bonds like AMZN, FB, NFLX, MTUM, SYL, XAR, XHE, SNAP, VTI, GOOG,PFE, F, VZ, and a few others. I invested in a lot of different stocks because I didn't really know what I was doing. Since I maxed it out already and made my final purchases, I cannot sell or buy anything right now. Most of my money is in AMZN, XAR, XHE, FB, GOOG, and VTI.

I might open a Vanguard account to invest some additional money in a taxable account since their ETFs are commission free and much cheaper than TD Ameritrade.

Aside from my job, I am planning on starting a business within the next few months to earn additional income and I will probably open a SEP-401K or Roth IRA.

I am curious as to why an HSA would be beneficial at this point? I already have an HMO plan w/my job, so why would I need to have this in place?

Honestly, I am fairly new to investing. I started doing this in Dec. 2017 after reading the Millenial Money blog. Any other books, websites, or resources would also be helpful.
Flyer24
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Joined: Sun Apr 08, 2018 4:21 pm

Re: What's Next?

Post by Flyer24 »

Many people recommend paying off the student loan before investing except for the 401K match. I would slow down and do some reading on this Wikipedia before making further investment decisions. You need an investment plan first. There are great portfolio recommendations on this site (not individual stocks).
Living Free
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Re: What's Next?

Post by Living Free »

"The roth IRA is with TD Ameritrade and it contains a slew of stocks and bonds like AMZN, FB, NFLX, MTUM, SYL, XAR, XHE, SNAP, VTI, GOOG,PFE, F, VZ, and a few others. I invested in a lot of different stocks because I didn't really know what I was doing. Since I maxed it out already and made my final purchases, I cannot sell or buy anything right now. Most of my money is in AMZN, XAR, XHE, FB, GOOG, and VTI. "


Are you sure you cannot buy or sell anything within your roth IRA? typically you can buy and sell within retirement accounts (and not have to worry about dealing with losses/gains and tax implications of that)
Topic Author
Capybara90
Posts: 7
Joined: Mon Jul 23, 2018 9:26 pm

Re: What's Next?

Post by Capybara90 »

Yes, I can buy and sell within my Roth IRA, but I don't have any funds available to do so at the moment. I put all of my contributions in stocks and bonds for this year. I will have some funds to cover the trade fees once my bond matures in December otherwise, I have to wait until next year to contribute more money. I only have 27 cents in cash available in that account.
Flyer24
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Joined: Sun Apr 08, 2018 4:21 pm

Re: What's Next?

Post by Flyer24 »

Capybara90 wrote: Tue Jul 24, 2018 10:03 pm Yes, I can buy and sell within my Roth IRA, but I don't have any funds available to do so at the moment. I put all of my contributions in stocks and bonds for this year. I will have some funds to cover the trade fees once my bond matures in December otherwise, I have to wait until next year to contribute more money. I only have 27 cents in cash available in that account.
When you are able, sell those stocks and individual bonds. You want to be diversified with broad index funds (commission free trades).
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ruralavalon
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Location: Illinois

Re: What's Next?

Post by ruralavalon »

You can amend your last post using the edit button (the pencil icon near the upper right corner of your post), which saves retyping and helps keep all of your information in one place.

Capybara90 wrote: Tue Jul 24, 2018 8:11 pm Here is some additional info.

Yes, I have student loan debt of approximately $27K, but I do have a tuition reimbursement check of $5K coming soon. I have 6 month grace period to pay them off since I will graduate in August. I do not carry any other type of debt, however, I would like to purchase a house and a new car within the next 6-12 months.
What is the interest rate on the student debt?

If the interest rate is fairly high, paying off the debt could be a relatively high "investment" priority. Please see the wiki article "Prioritizing Investments".

Don't be in too much of a hurry to add more debt for a car or a house.

Capybara90 wrote:I just started my job, so I do not have anything invested in the $401K until the next pay period. I put 50% in SWPPX (Schwab S&P 500 Index) and 50% in GTILX (Glenmede Quant US Large Cap Gr Eq Instl).
What other low expense ratio funds are offered in your 401k, in addition to Schwab S&P 500 Index Fund (SWPPX) ER 0.03%? Expense ratios are a primary factor in fund selection, along with broad diversification.

How much (in dollars) will you be contributing annually to your 401k? If the funds offered in your 401k are decent,it's a good idea to contribute the maximum employee contribution of $18.5k/year if practical for you.

Glenmede Quant U.S. Large Cap Growth Equity Institutional (GTILX) ER 0.66% is largely redundant, convering the same type of large-cap and mid-cap stocks as the S&P 500 index fund, but with a heavy "growth" tilt and a much higher expense ratio.


Capybara90 wrote:The roth IRA is with TD Ameritrade and it contains a slew of stocks and bonds like AMZN, FB, NFLX, MTUM, SYL, XAR, XHE, SNAP, VTI, GOOG,PFE, F, VZ, and a few others. I invested in a lot of different stocks because I didn't really know what I was doing. Since I maxed it out already and made my final purchases, I cannot sell or buy anything right now. Most of my money is in AMZN, XAR, XHE, FB, GOOG, and VTI.
Nobody has all those ticker symbols memorized. Please add the fund and stock names, amounts, as well as expense ratios for the funds.

It's good to see Vanguard Total Stock Market ETF (VTI) ER 0.04% in the mix.

I suggest opening an IRA at a low cost provider like Vanguard or Fidelity, and contributing the maximum $5.5k per year if practical for you.

If you open a Roth IRA at a low cost provider like Vanguard, you might rollover this Roth IRA into the Vanguard IRA, and so have one less account to keep track of and manage.

Capybara90 wrote:I might open a Vanguard account to invest some additional money in a taxable account since their ETFs are commission free and much cheaper than TD Ameritrade.
It's probably better to make maximum annual contributions the tax-advantaged accounts (like your 401k, and Roth IRA) as a priority ahead of opening a taxable brokerage account.

Please see the wiki article "Prioritizing Investments".

Capybara90" wrote:Aside from my job, I am planning on starting a business within the next few months to earn additional income and I will probably open a SEP-401K or Roth IRA.
You account options include an individual (solo) 401k, SEP IRA, and SIMPLE IRA. Vanguard and Fidelity both offer all three types of account. The Boglehead's wiki has articles on each type of account.

Adding these types of accounts does not increase the contribution limits,available for you.

Capybara90 wrote:I am curious as to why an HSA would be beneficial at this point? I already have an HMO plan w/my job, so why would I need to have this in place?
A Health Savings Account (HSA) can be used as an investment vehicle like an IRA, and offers tax advantages. Please see the wiki article "Health Savings Account".

You can use a HSA only if a High Deductible Health Plan (HDHP) is offered at work, and if a HDHP is suitable for your health insurance needs.

You may be right that a HMO is best for you.

Capybara90 wrote:Honestly, I am fairly new to investing. I started doing this in Dec. 2017 after reading the Millenial Money blog. Any other books, websites, or resources would also be helpful.
I.suggest starting with the wiki article "Boglehead's Investment Philosophy" for a broad overview.

I suggest Bernstein's The Four Pillars of Investing and The Bogleheads Guide to Investing for books to begin with.

Please see the wiki article "Books: Recommendations and Reviews" for more book ideas.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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