BeRadical08
Confused about dryer sheets
- Joined
- Mar 20, 2011
- Messages
- 1
Imagine you're 20 years old and you have the opportunity to start saving for retirement again in THIS market and THIS economy. Now you've already opened a 401K with your employer (TSP) and it's grown to just about $4,000. Your monthly contributions are steady at about 9% of your base pay, or $185/month. You intend on keeping the % the same, so your contributions will go up with every pay raise you receive.
Now you've also opened a ROTH IRA-Annuity in Dec '09. The first $1,000 you put in between then and now had a bonus fixed rate of 4%. From here on out, all remaining funds are compounded at a fixed rate of 3%. As of this month, March 2011, the annuity has grown to about $2,100. Your annual contributions are approx $2,000. There are no management fees, and you have no intentions of drawing any other fees like early withdrawal. You're in this for the long haul.
For about $100/month (roughly $600 contributed total so far) you're already taking short term investing into consideration with some higher-risk trading seeking high-yield returns, but you're still left with a reasonable amount of money AFTER establishing your emergency fund at about $6,000 (in a money market account).
You have no CC debt and you have one (auto) loan of $8400 at a fixed rate of 4.24% and the remainder of your spending money (We'll say it's sits around a $2,000 revolving balance) hangs out in a High-Yield Savings Account with an APY of 1.15%.
In terms of retirement, in terms of FINANCIAL RESPONSIBILITY to your future self.. What would you do next? What would you do with an extra $350 or so that you're making per month? Would you focus on paying off that car with the extra income? Invest in mutual funds? Stocks? Bonds? Open another annuity? You've been thinking that one answer is some form of Roth IRA since you're so young and compounding interest wins in almost every scenario.. but you're really not sure if that's accurate since you've been helped along pretty well so far.
Advice for this young and eager investor?
Now you've also opened a ROTH IRA-Annuity in Dec '09. The first $1,000 you put in between then and now had a bonus fixed rate of 4%. From here on out, all remaining funds are compounded at a fixed rate of 3%. As of this month, March 2011, the annuity has grown to about $2,100. Your annual contributions are approx $2,000. There are no management fees, and you have no intentions of drawing any other fees like early withdrawal. You're in this for the long haul.
For about $100/month (roughly $600 contributed total so far) you're already taking short term investing into consideration with some higher-risk trading seeking high-yield returns, but you're still left with a reasonable amount of money AFTER establishing your emergency fund at about $6,000 (in a money market account).
You have no CC debt and you have one (auto) loan of $8400 at a fixed rate of 4.24% and the remainder of your spending money (We'll say it's sits around a $2,000 revolving balance) hangs out in a High-Yield Savings Account with an APY of 1.15%.
In terms of retirement, in terms of FINANCIAL RESPONSIBILITY to your future self.. What would you do next? What would you do with an extra $350 or so that you're making per month? Would you focus on paying off that car with the extra income? Invest in mutual funds? Stocks? Bonds? Open another annuity? You've been thinking that one answer is some form of Roth IRA since you're so young and compounding interest wins in almost every scenario.. but you're really not sure if that's accurate since you've been helped along pretty well so far.
Advice for this young and eager investor?