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Old 01-03-2015, 10:57 PM   #1
Confused about dryer sheets
 
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Long time reader

I've been reading this forum for a while and finally decided to join up. I hope to retire by age 60 (32 years). I've been wondering if I am doing things right to accomplish this and figured why not ask here. I currently make 52,000 a year but that will prob double within the next 3-5 years. My company gives me 6% for free into a defined contribution account. This account has around 6,000 in it currently. I contribute to my Roth monthly and have just under 22,000 in it. Besides that I have 5,000 in a taxable mutual fund and 5500 in a money market account for emergencies. I've been putting 500 a month into my Roth and I usually have another 500 give or take left over. I was wondering if it would be best to put this 500 extra dollars towards my mortgage or buy more shares of mutual funds. Also, my company offers a 401 k but they do not match any contributions so I haven't signed up for it yet. Does it sound like i have a decent plan going? Any ideas or suggestions are appreciated.
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Old 01-04-2015, 05:07 AM   #2
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Welcome. My first suggestion is to read Bogleheads Guide to Investing. If you follow that you really can't go wrong. Second, LBYM. You are already in the game so keep it up. It's a marathon, not a sprint.
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Old 01-04-2015, 03:14 PM   #3
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Personally I would max out my company plan first then Roth and finally mortgage. Remember, one extra mtg payment (per year) applied to principal will reduce a 30 yr mortgage to around 19 years. Good luck and welcome!
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Old 01-04-2015, 04:26 PM   #4
Confused about dryer sheets
 
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Thanks for the replies, I really appreciate it. I will pick up the book this week. Biker, are talking about maxing out my 401 even though my compamy does not contribute anything to the 401? If so is this to reduce my taxable income?
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Old 01-04-2015, 05:28 PM   #5
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Biker, are talking about maxing out my 401 even though my compamy does not contribute anything to the 401? If so is this to reduce my taxable income?
Well yes, contributing to a regular 401K is less painful due to the tax advantage but the point I was making is that you should fund your retirement first so that you can take advantage of compounding.
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Old 01-04-2015, 05:36 PM   #6
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Find out if company offers ROTH 401K. If so, there you go.
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Old 01-04-2015, 07:11 PM   #7
Confused about dryer sheets
 
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Just checked and I could do a Roth 401 through work. Would it be more beneficial to do that over contributing to my current Roth?
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Old 01-05-2015, 05:51 AM   #8
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You can do both Roth IRA and Roth 401k if you'd like. You could thereby sock away a lot more than just doing the Roth IRA only. If you expect your salary to double in the next few years, this would be an excellent way to grow your tax free allocation while you can and with lower taxes.
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Old 01-05-2015, 08:16 AM   #9
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Bowline,
You're doing many good things, so the suggestions just make it better.
If there is any match in the 401k, make sure you get that.
But is is great to have both as options to tap into when you retire.
The rule you'll hear many times is:
1) Get the match from 401k
2) Max fund your Roth-IRA if possible
3) Add to taxable investing accounts

Do you get any tax advantage from the interest payments on your mortgage?

Take care.
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Old 01-05-2015, 03:18 PM   #10
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Just checked and I could do a Roth 401 through work. Would it be more beneficial to do that over contributing to my current Roth?

You're saving a little over 10%/year plus your employers 6%. This is a good start but won't get you there in 32 years. Looks like you're already maxing out your ROTH IRA and you need to save more than $5k/year....you need somewhere else to park your retirement money. The only reason to avoid your workplace 401k (ROTH or traditional) is if they have horrible choices or high fees.

My best advice is save at least half of every raise directly into your retirement accounts. You already live comfortably off what you make now, if you get used to spending the full amount of your raise, you will need to save so much more to offset the extra spending. So in the next 3 to 5 years if your salary doubles, you should be easily maxing out your 401k and IRA.
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Old 01-17-2015, 03:26 PM   #11
Confused about dryer sheets
 
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Thank you all very much.
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