New to investing, starting a roth ira at 46

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thelateinvestor43
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New to investing, starting a roth ira at 46

Post by thelateinvestor43 » Fri Nov 15, 2019 2:13 am

Hi,

Regrettably, at 46 I have just begun to start a Roth Ira at Fidelity. I plan on working at least another 20 years, and maybe never retiring really as I don't think I can afford to. I don't make a lot of money and I'm single and have no kids. Is it too late to start a Roth? I realize I'm not going to retire a millionaire, etc. I live and take care of my mother at the moment.

I have about $400, maybe $600, a month at least to throw into an IRA (roth) and have a larger amount that I inherited from my grandmother that I can also put in at $6000 a year. I am totally new to this. I did create an account, etc, but have not yet begun to fund it.

Can someone help give me some tips on the funds that would be best to select, etc or is that a subjective issue? For example, mutual funds or etfs, and how many.

lakpr
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Re: New to investing, starting a roth ira at 46

Post by lakpr » Fri Nov 15, 2019 7:44 am

What is your annual projected income? How much can you realistically save per year? Do you have access to a workplace retirement plan?

Depending on those answers, a Roth IRA may or may not be the best solution. Your workplace plan, if exists, might be. Or a traditional IRA might be.

rkhusky
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Re: New to investing, starting a roth ira at 46

Post by rkhusky » Fri Nov 15, 2019 7:49 am

Take a look at this post as to the type of information useful for giving portfolio advice:
viewtopic.php?f=1&t=6212

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Brianmcg321
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Re: New to investing, starting a roth ira at 46

Post by Brianmcg321 » Fri Nov 15, 2019 8:11 am

It's never to late!

You completed the first step. Now set up an auto draft and start depositing $500 a month.

In twenty years you could have about 300k in that account.

Drawing off that plus social security, you would be able to be pretty comfortable in retirement. Just make sure along the way you get rid of any consumer debt and have the mortgage paid off.

I would just use the total stock index. VTSAX. Or the Fidelity Zero total market index.
These are really all you need. Simple.

Here is some more recommended reading.
https://jlcollinsnh.com/stock-series/
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

flyingaway
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Re: New to investing, starting a roth ira at 46

Post by flyingaway » Fri Nov 15, 2019 8:19 am

I started my Roth IRA at 50, and put all money in a Fidelity total stock market index fund.

HomeStretch
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Re: New to investing, starting a roth ira at 46

Post by HomeStretch » Fri Nov 15, 2019 9:32 am

+1 in the absence of your portfolio information. Hold 100% equity in your Roth accounts for highest expected growth, tax free. However, if this is your only savings, 100/0 equity/bond allocation at your age is aggressive.

zeal
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Re: New to investing, starting a roth ira at 46

Post by zeal » Fri Nov 15, 2019 9:37 am

rkhusky wrote:
Fri Nov 15, 2019 7:49 am
Take a look at this post as to the type of information useful for giving portfolio advice:
viewtopic.php?f=1&t=6212
+1

This will really help the forum members give you the best advice. FYI, the annual maximum you can contribute to a Roth IRA right now is $6k (which equals $500/month). If you have a work-sponsored retirement plan like a 401k, you definitely want to look into that.

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BL
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Re: New to investing, starting a roth ira at 46

Post by BL » Fri Nov 15, 2019 9:38 am

You must have income from work; up to 6000/year (2019) to max it this year. You have until April 2020 to finish the 6000 for this year.
Google or see:
https://www.investopedia.com/articles/p ... -rules.asp

retiredjg
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Re: New to investing, starting a roth ira at 46

Post by retiredjg » Fri Nov 15, 2019 9:58 am

You said you don't make a lot of money and that you are taking care of your mother. With low enough income, you might be able to get some tax credits. Do you know about the saver's credit or the earned income credit?

Using a traditional IRA instead of Roth IRA would lower your taxable income and might make you eligible for more of a tax credit.

If you have an emergency fund, it would probably be a good idea to transfer some of your inheritance into IRA or Roth IRA.


https://www.bogleheads.org/wiki/Saver%27s_credit

I can't find a wiki page on the earned income credit, but maybe you can find info using google.

dru808
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Re: New to investing, starting a roth ira at 46

Post by dru808 » Fri Nov 15, 2019 10:41 am

If you max the Roth for the next 20 years, coupled with social security, you’ll be in better shape than you probably expect. The 2 million $ retirement fear mongering is what’s worrying you.

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Re: New to investing, starting a roth ira at 46

Post by pkcrafter » Fri Nov 15, 2019 10:51 am

Welcome to the forum,
thelateinvestor43 wrote:
Fri Nov 15, 2019 2:13 am
Hi,

Regrettably, at 46 I have just begun to start a Roth Ira at Fidelity. I plan on working at least another 20 years, and maybe never retiring really as I don't think I can afford to. I don't make a lot of money and I'm single and have no kids. Is it too late to start a Roth?

No, it's never too late.

I realize I'm not going to retire a millionaire, etc. I live and take care of my mother at the moment.

I have about $400, maybe $600, a month at least to throw into an IRA (roth) and have a larger amount that I inherited from my grandmother that I can also put in at $6000 a year.

What is this larger amount, is it accessible or distributed annually? Is it now invested? Is it tax protected?

I am totally new to this. I did create an account, etc, but have not yet begun to fund it.

Can someone help give me some tips on the funds that would be best to select, etc or is that a subjective issue? For example, mutual funds or etfs, and how many.

To begin, I'll suggest a lifestrategy fund or a target retirement fund. These are all in one funds that will provide good diversification while you continue to learn. The lifestrategy funds have a fixed asset allocation. The target retirement funds automatically reduce stock exposure over time. Don't choose target funds by the date, choose by asset allocation you are comfortable with. Also keep in mind that funds in a Roth or IRA can be changed without any tax consequence.

https://investor.vanguard.com/mutual-fu ... estrategy/#/

https://investor.vanguard.com/mutual-fu ... etirement/#/

Getting Started

https://www.bogleheads.org/wiki/Help:Getting_started
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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thelateinvestor43
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Re: New to investing, starting a roth ira at 46

Post by thelateinvestor43 » Fri Nov 15, 2019 2:05 pm

Thanks everyone!

So should I have 2 mutual funds in my IRA and/or ETFs, etc, or should I just have one mutual fund or whatever? I was looking at the Fidelity 2040 one that projects when you may "retire". Someone said a mutual with REITS is good also.

Someone also said not to put bonds in there?

I'm also wondering when you have a mutual fund, say, Are the stocks and stuff within it constantly being bought and sold by someone or do they just sit there in the mutual fund? I would think that they're updated and adjusted somehow along the way, especially one that tracks the 500 index.

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FiveK
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Re: New to investing, starting a roth ira at 46

Post by FiveK » Fri Nov 15, 2019 2:56 pm

thelateinvestor43 wrote:
Fri Nov 15, 2019 2:05 pm
So should I have....
Might be time well spent for you to look through
Getting started - Bogleheads
Prioritizing investments
Investment Order
and at least some of the links within those.

Doing that could help you understand more of the "why" behind specific advice you will get in this thread.
Last edited by FiveK on Fri Nov 15, 2019 6:09 pm, edited 1 time in total.

HomeStretch
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Re: New to investing, starting a roth ira at 46

Post by HomeStretch » Fri Nov 15, 2019 3:05 pm

thelateinvestor43 wrote:
Fri Nov 15, 2019 2:05 pm
So should I have 2 mutual funds in my IRA and/or ETFs, etc, or should I just have one mutual fund or whatever? I was looking at the Fidelity 2040 one that projects when you may "retire". Someone said a mutual with REITS is good also.

Someone also said not to put bonds in there?

I'm also wondering when you have a mutual fund, say, Are the stocks and stuff within it constantly being bought and sold by someone or do they just sit there in the mutual fund? I would think that they're updated and adjusted somehow along the way, especially one that tracks the 500 index.
It’s hard to help you with these questions without more information. Please use the format found here:
https://www.bogleheads.org/wiki/Asking_ ... _questions

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thelateinvestor43
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Re: New to investing, starting a roth ira at 46

Post by thelateinvestor43 » Fri Nov 15, 2019 5:26 pm

Thanks everyone for the links to read! I'll start reading them. For some reason, 2 weeks ago I just caught this "investing bug" and started getting all excited about this! I WISHED that I had done it 20 years ago! ..... Seriously I could've EASILY has 500k by now with all the money I blew over the years!

I even went out and bought "Investing for Dummies" and am going to read through it over the weekend!

I realize I won't retire a millionaire and am not worried about it. But whatever extra is money that I will have to help when I'm older! I now save everything I can and am trying to live as frugally as I can while I'm younger. I actually plan to work as long as I can and may have to anyways. I don't live extravagently anyways. As long as I have a small house, my car and the basics, I'm happy. A good majority of people in India and the Phillipines live on dirt floors and cook with a fire. Not everyone is "rich" like we are here in America.

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GerryL
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Re: New to investing, starting a roth ira at 46

Post by GerryL » Fri Nov 15, 2019 8:13 pm

thelateinvestor43 wrote:
Fri Nov 15, 2019 2:13 am
Hi,

Regrettably, at 46 I have just begun to start a Roth Ira at Fidelity. I plan on working at least another 20 years, and maybe never retiring really as I don't think I can afford to. I don't make a lot of money and I'm single and have no kids. Is it too late to start a Roth?
The Roth wasn't even invented until I was almost 50. So, in my book 46 is not too late.

retired@50
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Re: New to investing, starting a roth ira at 46

Post by retired@50 » Sat Nov 16, 2019 1:14 am

My advice would be to set up your contributions to your Roth IRA so they happen automatically, from your checking account, transferred to Fidelity every month or every two weeks, depending on your pay schedule and your bills. Since investing hasn't been a long term habit for you, this may help make it easier. Maybe you've heard the old saying "Pay yourself first". This kind of discipline will help get you to a more comfortable retirement when the day finally comes.

Do some reading about mutual fund choices at Fidelity if you want to shop around, but I'd urge you to stick with index mutual funds that try to cover the entire stock and bond markets. As an example you could look at Fidelity Total Market Index Fund (ticker symbol FSKAX) for a good place to invest in U.S stocks. You can also read up on FXNAX which is a U.S. Bond Index Fund.

If using multiple funds seems too complicated for your taste, you could use an "all in one" fund like Fidelity Freedom Index 2040 Fund (ticker symbol FBIFX).

Whichever fund(s) you choose to invest in, keep an eye on the expense ratio, lower numbers are better in this case... Look for something between 0.00 -- 0.15%

Regards,

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1789
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Re: New to investing, starting a roth ira at 46

Post by 1789 » Sat Nov 16, 2019 1:19 am

GerryL wrote:
Fri Nov 15, 2019 8:13 pm
thelateinvestor43 wrote:
Fri Nov 15, 2019 2:13 am
Hi,

Regrettably, at 46 I have just begun to start a Roth Ira at Fidelity. I plan on working at least another 20 years, and maybe never retiring really as I don't think I can afford to. I don't make a lot of money and I'm single and have no kids. Is it too late to start a Roth?
The Roth wasn't even invented until I was almost 50. So, in my book 46 is not too late.
Thanks for reminding this. Agreed with your comments.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

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thelateinvestor43
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Re: New to investing, starting a roth ira at 46

Post by thelateinvestor43 » Sat Nov 16, 2019 1:59 am

Thanks everyone!

So one more thing.

1. Say I have a mutual fund and had put $10k in it 5 years ago and now it has gone up to $16k without me putting anything else into it ( not that I would do that of course). Does that mean I NOW have $16k?

2. Theoretically, how would I get my $16k if I wanted to "cash it out"? Again, I wouldn't do that.

3. Do you just keep the mutual fund for the next 5, 10 or 20 years hoping that it keeps going up and up in value, or do you "cash it in" at some point?

thanks

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FiveK
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Re: New to investing, starting a roth ira at 46

Post by FiveK » Sat Nov 16, 2019 2:34 am

thelateinvestor43 wrote:
Sat Nov 16, 2019 1:59 am
1. Say I have a mutual fund and had put $10k in it 5 years ago and now it has gone up to $16k without me putting anything else into it ( not that I would do that of course). Does that mean I NOW have $16k?
Yes - before tax.
2. Theoretically, how would I get my $16k if I wanted to "cash it out"? Again, I wouldn't do that.
You would tell (in person, or by phone, or online. or even by mail) the brokerage that holds the fund to sell it and send you a check.
3. Do you just keep the mutual fund for the next 5, 10 or 20 years hoping that it keeps going up and up in value, or do you "cash it in" at some point?
Depends on the fund itself and where you are holding it. Do you have the brokerage name, and the fund ticker symbol and name?

rossington
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Re: New to investing, starting a roth ira at 46

Post by rossington » Sat Nov 16, 2019 3:02 am

thelateinvestor43 wrote:
Sat Nov 16, 2019 1:59 am
Thanks everyone!

So one more thing.

1. Say I have a mutual fund and had put $10k in it 5 years ago and now it has gone up to $16k without me putting anything else into it ( not that I would do that of course). Does that mean I NOW have $16k?

2. Theoretically, how would I get my $16k if I wanted to "cash it out"? Again, I wouldn't do that.

3. Do you just keep the mutual fund for the next 5, 10 or 20 years hoping that it keeps going up and up in value, or do you "cash it in" at some point?

thanks
1) Yes you have 10k original investment plus 6k Unrealized capital gain. (Please see Unrealized vs. Realized capital gains https://investor.vanguard.com/investing ... ital-gains)...taxes will be a consideration.

2)You answered your own question - you sell the fund entirely. But keep in mind the trade may not execute @ exactly 16k for a variety of reasons.

3)This is not the way to approach this hypothetical question. Read the Bogleheads Wiki and plan your retirement according to your needs. You obviously first and foremost need to educate yourself very thoroughly about investing, stay focused & devote as much time as possible EVERY DAY. A year from now you will be glad you did. Heed the advice from the posts above and research anything you do not understand.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

retiredjg
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Re: New to investing, starting a roth ira at 46

Post by retiredjg » Sat Nov 16, 2019 7:47 am

thelateinvestor43 wrote:
Sat Nov 16, 2019 1:59 am
3. Do you just keep the mutual fund for the next 5, 10 or 20 years hoping that it keeps going up and up in value, or do you "cash it in" at some point?
If the money is for retirement, you would probably not "cash it in" all together unless you actually need it all.
  • - You might change to another mutual fund(s) that is more in line with your older age (to preserve what you have)

    -You might sell some to pay your living expenses, leaving the rest alone.

    -You might just leave it if you don't need the money.

    -Etc.

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thelateinvestor43
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Re: New to investing, starting a roth ira at 46

Post by thelateinvestor43 » Sat Nov 16, 2019 1:22 pm

Ok, thanks everyone.

So, I still don't quite understand about for example, the mutual fund.

Say, someday it's up to $20k or whatever.

1. As I get older, do I "get nervous" and say, "I'd better cash this is because it could drop down to $5k and I won't have any retirement money!" or am I overreacting here?

2. Someone mentioned something about taxes, but I thought as long as it's in a Roth Ira I won't owe any taxes at withdrawal time?

3. Someone said that if "you have" $16k in the mutual fund, that may not be exactly $16k?

Sorry, a little confused - I'll be reading "Investing for Dummies" this weekend! :D

retiredjg
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Re: New to investing, starting a roth ira at 46

Post by retiredjg » Sat Nov 16, 2019 1:41 pm

thelateinvestor43 wrote:
Sat Nov 16, 2019 1:22 pm
1. As I get older, do I "get nervous" and say, "I'd better cash this is because it could drop down to $5k and I won't have any retirement money!" or am I overreacting here?
If your portfolio is 100% stocks when you get older, that would be a real problem. In general, it is suggested to have a high stock to bond ratio when you are younger (say 80% stocks and 20% bonds) and a lower stock to bond ratio when you are older (maybe 40% stocks and 60% bonds). This is so that your money does not disappear as in the example you gave.

This transition from an aggressive portfolio to a more conservative portfolio is usually done over a period of years.

2. Someone mentioned something about taxes, but I thought as long as it's in a Roth Ira I won't owe any taxes at withdrawal time?
Taxes are not a problem in a Roth IRA. You can withdraw your contributions (not earnings) any time. The earnings are available tax free when you are over 59.5 as long as your first contribution was more than 5 years ago.

3. Someone said that if "you have" $16k in the mutual fund, that may not be exactly $16k?
It goes up and down everyday.
Sorry, a little confused - I'll be reading "Investing for Dummies" this weekend! :D
Enjoy.

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GerryL
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Re: New to investing, starting a roth ira at 46

Post by GerryL » Sat Nov 16, 2019 2:04 pm

thelateinvestor43 wrote:
Sat Nov 16, 2019 1:22 pm
Ok, thanks everyone.

So, I still don't quite understand about for example, the mutual fund.

Say, someday it's up to $20k or whatever.

1. As I get older, do I "get nervous" and say, "I'd better cash this is because it could drop down to $5k and I won't have any retirement money!" or am I overreacting here?

2. Someone mentioned something about taxes, but I thought as long as it's in a Roth Ira I won't owe any taxes at withdrawal time?

3. Someone said that if "you have" $16k in the mutual fund, that may not be exactly $16k?

Sorry, a little confused - I'll be reading "Investing for Dummies" this weekend! :D
Another -- highly recommended -- book is Bogleheads Guide to Investing.

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thelateinvestor43
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Re: New to investing, starting a roth ira at 46

Post by thelateinvestor43 » Sun Nov 17, 2019 12:38 am

Thanks GerryL and retiredjg!

Caduceus
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Re: New to investing, starting a roth ira at 46

Post by Caduceus » Sun Nov 17, 2019 1:50 am

Don't fixate on the "lateness" part of it. You can become financially stable very quickly with the right strategy. My guess is that the vast majority of people can achieve a fair amount of financial independence within a decade, but they choose not to do it.

It's not difficult, even without a high salary. I knew a fair number of people in graduate school (as you know ... graduate students earn next to nothing) who saved more than $100,000 by the time they finished their program. How, you ask? No cable/TV. No car (public transportation everywhere). Sharing apartments with roommates (low rent/housing costs). They ended their Ph.D programs with six figures in the bank/IRAs.

take advantage of your current excitement and get a headstart! Your biggest expenses matter the most. Don't try so much to save a latte here or a latte there (although it does help). What you want to do, is cut down on your biggest expenses: Live in the smallest/cheapest housing you can that is pleasing to you. Own the crappiest car that will get you where you need to go, or even better, if you live in a city, just use public transportation. Don't buy clothing until they have holes in it (that's a rule of mine I've waived only once in a decade). Laugh at suggestions to save 30% of your income and save at least 50% instead - do that by paying yourself first and surviving on what's left over. I tried that in graduate school and used to eat nothing but pasta and canned sauce the last three days of the month before my next paycheck (even though, yes, I had plenty of money in the bank for better food).

Treat it like a game. Make it competitive (not with others, but with yourself). It can be pretty fun.

I had much less money when I was a student, but I remember being incredibly happy. Maybe I was even happier than I am now, it is hard to say. You don't need millions to lead a good, simple, satisfying life. But interestingly enough, leading a simple life now will give you the option to live larger when you are older, if you really want to.

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