Roth IRA Backdoor Investment question

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Abk911
Posts: 21
Joined: Thu Aug 09, 2018 1:22 pm

Roth IRA Backdoor Investment question

Post by Abk911 » Thu Aug 09, 2018 1:30 pm

Dear Coaches, I need your guidance on a few things:

1) I am Planning on starting the backdoor RIRA for me and wife.
2) will be doing the same with Vanguard
3) I am 40 years old

Now here is where i need help:

Typically for 401K ... I usually choose a retirement path fund. However, the intent of the RIRA is probably / may be for child education (12 years outlook) but if not required for education then continue and then use for retirement. I am torn apart between:

a) a Retirement path fund like a 2045 / but may need money earlier like i said may be for education as i am not doing 529
b) shld i just do all investments in a VTI type of ETF... am assuimng there will always be uninvested dollars left due to no fractional purchase.
c) is there a better way to do this? as in a better combination?

look forward to some guidance and coaching based on what others are doing.

Thanking in advance.

retiredjg
Posts: 33870
Joined: Thu Jan 10, 2008 12:56 pm

Re: Roth IRA Backdoor Investment question

Post by retiredjg » Thu Aug 09, 2018 5:47 pm

If you believe your Roth IRAs will be used for retirement, invest them like your other retirement money.

If there is a decent possibility the money will be used for college, invest it more conservatively (not just in stocks) and when a few years out, make it even more conservative by putting it all in money market and/or short term bonds. For now, a target fund something like 80/20 or 70/30 stocks/bonds, but that glide path needs to get less aggressive pretty quickly.

Money that is needed at a certain time should not be invested in stocks. It might not be there when you need it.

Abk911
Posts: 21
Joined: Thu Aug 09, 2018 1:22 pm

Re: Roth IRA Backdoor Investment question

Post by Abk911 » Thu Aug 09, 2018 6:48 pm

any good Vanguard funds that replicate a 70/30 or 80/20 formula ....

mhalley
Posts: 6069
Joined: Tue Nov 20, 2007 6:02 am

Re: Roth IRA Backdoor Investment question

Post by mhalley » Fri Aug 10, 2018 1:21 pm

Lifestrategy growth (80/20)

Vanguard Total Stock Market Index Fund Investor Shares 48.10%
Vanguard Total International Stock Index Fund Investor Shares 31.60%
Vanguard Total Bond Market II Index Fund Investor Shares† 14.30%
Vanguard Total International Bond Index Fund Investor Shares 6.00%
100.00%
Lifestrategy moderate growth is 60/40, so you could combine them to get to 70/30.
Or use a tr fund that has the aa you want.
https://investor.vanguard.com/mutual-fu ... estrategy/#/
Before investing in a Roth that won’t be used for retirement, run the calculations and confirm that your 401k and other retirement savings will support you in retirement. There are multiple ways to pay for college, but few to fund retirement.

PFInterest
Posts: 2252
Joined: Sun Jan 08, 2017 12:25 pm

Re: Roth IRA Backdoor Investment question

Post by PFInterest » Mon Aug 20, 2018 7:03 pm

Abk911 wrote:
Thu Aug 09, 2018 1:30 pm
Dear Coaches, I need your guidance on a few things:

1) I am Planning on starting the backdoor RIRA for me and wife.
2) will be doing the same with Vanguard
3) I am 40 years old

Now here is where i need help:

Typically for 401K ... I usually choose a retirement path fund. However, the intent of the RIRA is probably / may be for child education (12 years outlook) but if not required for education then continue and then use for retirement. I am torn apart between:

a) a Retirement path fund like a 2045 / but may need money earlier like i said may be for education as i am not doing 529
b) shld i just do all investments in a VTI type of ETF... am assuimng there will always be uninvested dollars left due to no fractional purchase.
c) is there a better way to do this? as in a better combination?

look forward to some guidance and coaching based on what others are doing.

Thanking in advance.
use a TDF that is more conservative.
i would not pull out Roth money for college. they can take loans for that.

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