5 Band-Aid fixes that hurt your finances


Great info hornet!!

I'll be back with a few more questions but for
starters; WHAT IS THE MINIMAL to get the Roth going? and all the money in a Roth that has been there over 5 years( even the New money gained) is mine tax free?

annnnd what other things beside stock market are available- T- bills? CD's ? etc etc ?
 
Tony said:
Great info hornet!!

I'll be back with a few more questions but for
starters; WHAT IS THE MINIMAL to get the Roth going? and all the money in a Roth that has been there over 5 years( even the New money gained) is mine tax free?

annnnd what other things beside stock market are available- T- bills? CD's ? etc etc ?
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I missed one of your statements- you don't have to put all your money in the market - you should diversify your portfolio.

Usually $1000 at most firms, I strongly suggest you go with a discount firm.

If you are looking for a way to get started With very little money, DRIPS are a great way to start investing.
 

Olde Hornet said:
Roth IRA: this type of IRA plan is slightly different than the traditional IRA plan because contributions are taxed before deposit. However, earnings within the IRA are also allowed to grow exempt of tax and withdrawals after retirement are tax-free. The funds within this account may not be withdrawn for the first 5 years after establishment. In essence, this account is very similar to the traditional IRA; the difference is contributions are taxed before they are deposited rather than later when it is withdrawn.
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Knowing that information, why would I put my emergency fund here?
 
Olde Hornet said:
You can take our your original investment out at anytime.
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That's the thing...I don't want an investment. I wanted an emergency savings/ rainy day fund, as liquid as possible. Otherwise, I'd just leave it in my 401(k). I get what you're saying but sometimes simplicity is everything. Especially with my current lifestyle/ situation.

A Roth might be in my future though. 2014 is my first year doing independent consulting, so I am not sure what my tax situation is going to be looking like. If I get a refund, I may set up a Roth IRA. If I end up owing, I will explore some other options.
 
LS Syndicate said:
That's the thing...I don't want an investment. I wanted an emergency savings/ rainy day fund, as liquid as possible. Otherwise, I'd just leave it in my 401(k). I get what you're saying but sometimes simplicity is everything. Especially with my current lifestyle/ situation.

A Roth might be in my future though. 2014 is my first year doing independent consulting, so I am not sure what my tax situation is going to be looking like. If I get a refund, I may set up a Roth IRA. If I end up owing, I will explore some other options.
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LS - its a good thing to have the rainy day fund. I totally understand. They way jobs are these days, I strongly recommend the rainy day fund.

Once you get your emergency fund in place, I do suggest that you look into drips, they automatically reinvest the dividends. It allows you to invest with little money every month (Its seems you are not thrilled about the market, but given low interest rates, market is the best game in town right now). If you ever do a drip, create a spreadsheet to track investment and earnings - it will help you keep track of tax liability when you sell.
 
Olde Hornet said:
LS - its a good thing to have the rainy day fund. I totally understand. They way jobs are these days, I strongly recommend the rainy day fund.

Once you get your emergency fund in place, I do suggest that you look into drips, they automatically reinvest the dividends. It allows you to invest with little money every month (Its seems you are not thrilled about the market, but given low interest rates, market is the best game in town right now). If you ever do a drip, create a spreadsheet to track investment and earnings - it will help you keep track of tax liability when you sell.
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Yeah, I'll take a look at that. And I definitely love the market...my 401(k) is 75% growth funds....2008 and 2009 hurt me pretty bad, but I was still not even 30 yet and this year I had a 31% YTD RoR. I can't afford not to be primarily in the market. :tup:
 
LS Syndicate said:
Yeah, I'll take a look at that. And I definitely love the market...my 401(k) is 75% growth funds....2008 and 2009 hurt me pretty bad, but I was still not even 30 yet and this year I had a 31% YTD RoR. I can't afford not to be primarily in the market. :tup:
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But here's the thing, did you or anyone recover/make it back up from 2008 & 2009?
and nothing guarantees there won't be another 08/09.
 
Tony said:
But here's the thing, did you or anyone recover/make it back up from 2008 & 2009?
and nothing guarantees there won't be another 08/09.
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All long term studies on investing, consistently show the market provides the best growth long term. I made my money back and more, those who pulled out the market lost big time.

There will be another down market and there will be another up market. You need to start rebalancing your market heavy investment about 5 years before you retire. The idea is to put money in the market over time, not only when it's up or down. You should have a diversified portfolio.
 
There are some good low cost broad market ETFs and Mutual funds out there. You want to dollar cost average going into the market, adding something each month.
 
Tony said:
But here's the thing, did you or anyone recover/make it back up from 2008 & 2009?
and nothing guarantees there won't be another 08/09.
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You never really make it back up, IMO. The money that tanked in 2009 wasn't there to compound interest in 2010 when things picked back up for me. I'm pretty sure another year/ like that will come around, but over time as I get older, I plan to change my investment strategies to take on less risk. So that if I lose, I won't lose as big.
 
Great thread! Key thing to note is "compounding interest"! Let your money make money. If you don't allow your accounts (401k, mutual funds, etc.,) to grow, then it "stagnates". Never touch the 401k! Pay yourself first by way of your savings & investments (~20% of my take home), keep to a realistic budget (tax refunds are not sources of income BTW), review your insurance policies (just saved $330 this year) AND live within your means! The Jones won't ever pay your bills!!
 
LS Syndicate said:
You never really make it back up, IMO. The money that tanked in 2009 wasn't there to compound interest in 2010 when things picked back up for me. I'm pretty sure another year/ like that will come around, but over time as I get older, I plan to change my investment strategies to take on less risk. So that if I lose, I won't lose as big.
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I agree and disagree about making it up. Given the ups and downs of the market, in the long term you are better off in the market. Any money you need within 5 years, you should remove risk.
 
3 Smart Retirement Moves to Make in 2015

http://www.fool.com/retirement/general/2014/12/30/3-smart-retirement-moves-to-make-in-2015.aspx

The start of 2015 is right around the corner, and with it comes an opportunity to make three smart moves that can help you secure a more comfortable retirement.

What are those three smart moves?
No. 1: Update your contribution amount. In 2015, the contribution limits for most employer-sponsored retirement plans, including 401(k), 403(b), 457, and the federal government's Thrift Savings Plan, increase to $18,000 from $17,500.

No. 2: Align your investment allocations with your current reality. In most 401(k) and other employer-sponsored plans, you set your investment choices once, and then they continue with every contribution until you specifically request another change.

No. 3: Review your retirement planning tax strategy. When qualified retirement plans got their start, they came with the basic premise of tax-deferred contributions, tax-deferred growth, and withdrawals taxed at your full marginal income tax rate.
 
Jaguar Diehard said:
Great thread! Key thing to note is "compounding interest"! Let your money make money. If you don't allow your accounts (401k, mutual funds, etc.,) to grow, then it "stagnates". Never touch the 401k! Pay yourself first by way of your savings & investments (~20% of my take home), keep to a realistic budget (tax refunds are not sources of income BTW), review your insurance policies (just saved $330 this year) AND live within your means! The Jones won't ever pay your bills!!
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How Compound Returns Favor the Young

http://www.getrichslowly.org/blog/2006/05/23/how-compound-interest-favors-the-young/
 

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