IRA Startup

Discussion in '401k, IRA and Retirement' started by Gavin, Feb 18, 2015.

  1. Gavin

    Gavin Active Member

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    Alright, so I'm looking at a possible IRA in the next year, but I don't have much knowledge on them outside of a guy named Roth and your normal IRA both seem to be helpful in the retirement era.

    What's some things that you all invest in, what's some brokers you use, and what makes your IRA better than the 40,000 that are out there.

    Some background info to help with this, we'd like to have a retirement of 1.25 million and we're both scratching into our early thirties so we're still way way way on the other side of that. We're currently sitting at $30,000 in 401k, and have other investments ranging around $12,000. We have liquidity of $8,000 so again we're at the beginning of a good 20 - 30 year journey.

    My wife might soon be changing her job situation which would change our 401k allocations so I'd like to be prepared to do something about it.
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    You can roll over 401ks from former employers into an IRA.

    Aside from that, you should max out your annual contributions every year.

    Since taxes won't be an issue for the next couple of decades, you just want to make sure you use reputable brokers / discount brokers that are SIPC insured and in good financial and regulatory standing. And also that you're not paying a huge amount of unnecessary fees or transaction costs.
     
  3. SteakTartare

    SteakTartare Senior Investor

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    With IRA's, get in early, and max out the contributions each year. I started an IRA account at the age of 22, and I'm glad I did. But early 30s isn't bad either; there are plenty of folks who started much later.

    Regarding the type, unless your income as at the point that you can write off contributions to a Traditional IRA, there is no reason not to go with a Roth. Many folks that is the case, so there is no need to bother. If you go with a Traditional, you can convert it later, with some caveats.

    If it were me, I'd open a Roth IRA for each of you at Vanguard. Roll over what you can and then start socking away. Not that long ago I rolled over a large chunk from a Defined Benefits plan to an IRA and it was a piece of cake with the aforementioned company. There are plenty of other good investment companies beyond the aforementioned too.

    The most important thing is to get started and keep focused. Good luck. :)
     
  4. Gavin

    Gavin Active Member

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    Thanks for the tips. I'm going to look into the roll over option and go through Vanguard if it gives me the warm and fuzzies. We've gone through the housing crash and moving and all this being broke stuff, so its nice to think about options that's wealth building versus the opposite.
     
  5. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Yeah, the Roth IRA is generally best while you're young, as long as you're not already making too much $ to qualify. If you're already making say a couple hundred grand a year or more, you'll have to go with a traditional IRA.

    But if you have a 401k at work and your job offers the ROTH 401k, that particular investment vehicle does NOT have a max income limit. And you can contribute far more to the 401k each year than an IRA. Ideally you'll be able to max out both an IRA and a 401k or similar plan each year if you're doing well and not having to spend too much money to live on each year. Employers often match 401k dollars up to a point as well.

    And if you are or ever become self-employed, the SEP and similar plans are also great tools.

    I have had a Roth IRA, traditional IRA, traditional 401k, Roth 401k, and SEP over the years as I've gone through over 20 years of various after-college career changes. At one point I was splitting my annual max overall 401k contributions between a traditional 401k to lower my taxable income and also a Roth 401k with after-tax dollars for tax-free longterm growth.

    Stay diversified and focused on the longterm big picture.
     
    Last edited: Feb 19, 2015

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