| Opened a ROTH IRA @ Bank of America...wise decision? |
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sanbas
New Member
Cash: $ 1.30
Posts: 6
Joined: 13 Aug 2005
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| Opened a ROTH IRA @ Bank of America...wise decision? |
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I just finished off my student loans (after paying the minimum for a few years and still not having money leftover at the end of the year, i decided i didnt want to pay student loans for 10+ years and started paying $900/mo for the past year).
Now that i have extra money leftover monthly, i dont want to go back to the bad habit of wasting it and would rather invest for short term and long term wealth.
I increased my monthly car loan payment so i can get rid of that faster also. Thats the only loan i have left now, NO credit card debts.
One of the first things i did after finishing my Student loans i wen to Bank of America and opened a ROTH IRA.
- Was that wise to do?
- Is it just as good to do that with Bank of America as with an online
brokerage like Scottrade?
- I will still have some money leftover, so i was going to open an account with Scottrade, I dont know the first thing about investing, but am learning.
Investments:
- Roth IRA ---------------------------- OPENED
- Company 401K plan (~7 yrs) ----- VESTED
- $8000 car loan @ 6.9% ------------ PAID OFF
- $25k student loans ---------------- PAID OFF
- 1x CREDIT CARD ------------------- PAY OFF MONTHLY
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Tue Aug 16, 2005 2:32 am |
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MattL
Senior Member
Cash: $ 46.85
Posts: 234
Joined: 25 Jun 2005
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| Re: Opened a ROTH IRA @ Bank of America...wise decision? |
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quote:
Originally posted by sanbas
I just finished off my student loans (after paying the minimum for a few years and still not having money leftover at the end of the year, i decided i didnt want to pay student loans for 10+ years and started paying $900/mo for the past year).
Now that i have extra money leftover monthly, i dont want to go back to the bad habit of wasting it and would rather invest for short term and long term wealth.
I increased my monthly car loan payment so i can get rid of that faster also. Thats the only loan i have left now, NO credit card debts.
One of the first things i did after finishing my Student loans i wen to Bank of America and opened a ROTH IRA.
- Was that wise to do?
- Is it just as good to do that with Bank of America as with an online
brokerage like Scottrade?
- I will still have some money leftover, so i was going to open an account with Scottrade, I dont know the first thing about investing, but am learning.
Do you have an emergency fund? I would stash six month's of earnings in a money market.
Is your 401K maxed out?
What type of investment is your ROTH in?
$$$ Debt Elimination
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Tue Aug 16, 2005 2:38 am |
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sanbas
New Member
Cash: $ 1.30
Posts: 6
Joined: 13 Aug 2005
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emergency fund...hmm, i have a stable job, been then almost 10 years. Incase of hardship i think i have ways to manage however.
I can put up to 15% (i think) of my earnings, but the employer only matches 6% so i only put up 6% of my paycheck (i have read that, that was the rule of thumb, to match your employer and not more esp. not less)
The Bank of America ROTH IRA (so far i have only $500 in it, b/c i just opened a few days ago) is in money market @ interest rate 1.830% and annual percentage yield @ 1.845%, UNTIL i get $1000 in it I cant put it in CDs the banker told me which has higher interest. <-- now even though i typed all that myself, i have no idea what most of it means, its just whats in my online banking report.
Investments:
- Roth IRA ---------------------------- OPENED
- Company 401K plan (~7 yrs) ----- VESTED
- $8000 car loan @ 6.9% ------------ PAID OFF
- $25k student loans ---------------- PAID OFF
- 1x CREDIT CARD ------------------- PAY OFF MONTHLY
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Tue Aug 16, 2005 3:50 am |
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MattL
Senior Member
Cash: $ 46.85
Posts: 234
Joined: 25 Jun 2005
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quote:
Originally posted by sanbas
emergency fund...hmm, i have a stable job, been then almost 10 years. Incase of hardship i think i have ways to manage however.
I can put up to 15% (i think) of my earnings, but the employer only matches 6% so i only put up 6% of my paycheck (i have read that, that was the rule of thumb, to match your employer and not more esp. not less)
The Bank of America ROTH IRA (so far i have only $500 in it, b/c i just opened a few days ago) is in money market @ interest rate 1.830% and annual percentage yield @ 1.845%, UNTIL i get $1000 in it I cant put it in CDs the banker told me which has higher interest. <-- now even though i typed all that myself, i have no idea what most of it means, its just whats in my online banking report.
I know plenty of people that worked somewhere in "stable" jobs for 20+ years only to be laid off. Those with emergency funds were fine. Those without were totally stressed out and some had to sell their homes.
What would happen if you become ill and can't work? Unless you have disability insurance that lost income will come out of your pocket.
The way to do the 401K is to contribute up to the match, then max out your IRA, then go back to the 401k with any remaining funds. So many people take that only contribute up to the match too literally.
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Tue Aug 16, 2005 3:23 pm |
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Kenstill
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Cash: $ 2.15
Posts: 10
Joined: 11 Aug 2005
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Glad to hear that you're looking to save that extra money.
I think it's safe to say that most here would not suggest putting your ROTH IRA in a Money Market or CD. If you're in it for the long haul, investing in some mutual funds is going to give you better payoff in the long run.
I'm not financial guru, so I'll leave the specific fund recommendations up to others.
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Tue Aug 16, 2005 4:13 pm |
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MattL
Senior Member
Cash: $ 46.85
Posts: 234
Joined: 25 Jun 2005
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quote:
Originally posted by Kenstill
Glad to hear that you're looking to save that extra money.
I think it's safe to say that most here would not suggest putting your ROTH IRA in a Money Market or CD. If you're in it for the long haul, investing in some mutual funds is going to give you better payoff in the long run.
I'm not financial guru, so I'll leave the specific fund recommendations up to others.
I agree, but I don't think sanbas is ready for fund recommendations yet. The basics aren't quite clear yet (no offense - gotta start somewhere).
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Tue Aug 16, 2005 4:31 pm |
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sanbas
New Member
Cash: $ 1.30
Posts: 6
Joined: 13 Aug 2005
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yeah I am very new to this, you mean invest in mutual funds through the ROTH IRA (is that even possible) or simply in mutual funds?
I use to think ROTH IRA was something you simply put money into and it compounds interest, didnt know you had to make decisions like should it be money market, cd, etc...those are the only 2 i know of so far.
Very interesting info. @ http://www.manageyourdollars.net/SaveMore
and simplifies...thanks
Investments:
- Roth IRA ---------------------------- OPENED
- Company 401K plan (~7 yrs) ----- VESTED
- $8000 car loan @ 6.9% ------------ PAID OFF
- $25k student loans ---------------- PAID OFF
- 1x CREDIT CARD ------------------- PAY OFF MONTHLY
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Tue Aug 16, 2005 11:13 pm |
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MattL
Senior Member
Cash: $ 46.85
Posts: 234
Joined: 25 Jun 2005
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quote:
Originally posted by sanbas
I use to think ROTH IRA was something you simply put money into and it compounds interest, didnt know you had to make decisions like should it be money market, cd, etc...those are the only 2 i know of so far.
An IRA is just the vehicle, not an investment in itself. Think of it like a savings account that you get to choose where the money is invested.
$$$ Debt Elimination
Software | Computers | Electronics
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Fri Aug 19, 2005 4:03 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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quote:
Originally posted by MattL
I know plenty of people that worked somewhere in "stable" jobs for 20+ years only to be laid off. Those with emergency funds were fine. Those without were totally stressed out and some had to sell their homes.
Matt's right. Don't forget "Mother Nature", too.
Have 4-6 weeks living expenses in L1 emergency funds in a Money Market account with a checkbook and debit card. Your Roth can be your L2 emergency funds (you can withdraw your contributions at any time for any reason without penalty).
If your 401k has good investment choices, why not max it out? Use the tax savings to fund your Roth or emergency fund.
"Expect me when you see me."
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Wed Aug 31, 2005 4:25 am |
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