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investing after maxing 401k and ira reddit

January 21, 2021


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Otherwise there's nothing wrong with keeping it simple with mutual funds. FXAIX is a S&P500 index fund but you can buy dollar amounts do doesn’t that make it a mutual fund and less tax efficient? The after-tax 401k will defer any taxes and can later be rolled into an IRA, or an in-service rollover to Roth 401k if your employer allows it. Just a little background. Clients regularly ask whether they should max out a 401(k) — and sometimes they’re surprised by the answer, says Jeff Weber, a certified financial planner and wealth advisor at Titus Wealth Management. I have an emergency fund of $30,000. I guess that I'm on the right track and the plan is just open another brokerage account with Vanguard (My IRA is already with them) and look for opportunities in the real estate market. What’s the deal with that? Looks like you're using new Reddit on an old browser. For 2021, you can contribute up to $6,000 to a Roth IRA, or $7,000 if you’re age 50 or older. So I was thinking about a 529 as there are some tax savings at the state level. Thank you again. I guess ETFs are slightly more liquid as well. I believe you can't set up automatic investments, you have to do it manually and you have to buy full shares. I'm needing investment advice on where to put my money. Suppose you start maxing out your 401(k) at 25 and you invest it aggressively, meaning primarily in stocks. Can you withdrawal the principal amount of your after tax investments into the 401k without penalty? Also wanted to plug Schwab index fund ETFs in addition to the Vanguard and Fidelity ones you mentioned, super low expense ratios, no transaction fees and no minimums. Here are the funds that I’m considering investing in, any input or thoughts would be appreciated. Do you have kids? Does your empoloyer allow inservice rollovers, allowing you to megabackdoor roth? Sounds like annuities might not be the best investment vehicle for me. While you’ll be grateful for what you save now once the time comes to retire, it’s important to think of the big picture: What other goals do you have between now and then? I. I honestly can’t decide between Fidelity and Vanguard as my main broker. The real estate thing is a good option if you're not moving away at some point in the future. So, if you’d like each paycheck to put some money into your brokerage account and for it to be seamlessly invested, mutual funds are more supported. Join our community, read the PF Wiki, and get on top of your finances! BTW, great job on your personal financial planning. Outside of that, the condo is in pretty good shape as I have upgraded the bathroom in 2016 and the kitchen in 2010. There are other reasons to reconsider maxing out 401(k) contributions. You need to figure out your risk tolerance, your goals and how much effort you want to put into this. 4. Contribution Limits As some of the wealthiest Americans are well aware, there are limits on how much you can invest in tax sheltered accounts. If you are otherwise following the Prime Directive and your employer doesn't allow it, then taxable brokerage. If I was to do that would those contributions avoid the mutual fund tax inefficiency since it’s in a retirement account as opposed to a brokerage account? “Most people think that putting extra money aside for retirement i… I appreciate your advice. Health care expenses paid from your HSA are triple-tax-advantaged. any input or thoughts would be appreciated. I guess 64k annual income at retirement wouldn't be bad if I keep doing what I'm doing. I am a bot, and this action was performed automatically. A taxable account has more trading options but you'll be taxed now if you make sales. Investing After Maxing Out Your 401 (k) Those who have contributed the maximum dollars to their 401 (k) plans can augment their retirement savings with the following vehicles: … I will look into contributing into a HSA. My 401k is through a different broker, but they really have decent selections including index funds. Similarly to how a ROTH IRA lets you withdraw your money -gains without penalty? Paying for a child's college education can greatly impact your nest … If your employer offers a HSA and you like that type of healthcare plan then you could also max that out. I was looking at annuities, but I don't know too much about them. Some people like the 3 fund portfolio, in which case, they say total market domestic stock or international stock is better for taxable accounts and you'd have got consider your entire portfolio as a whole. You're looking at 2, 3, 4%+ of your portfolio gone each year to using a financial advisor. Any suggestions? My 401k is currently with Fidelity and they generally have lower expense ratio funds. Pick what you like. Vanguard/fidelity/schwab are equally fine. You should have your pick of 10 or so mutual funds that each … With a traditional IRA, you get the benefit of a tax deduction on the contributions you make and you don’t pay any taxes on the money until you start making qualified withdrawals in retirement. I have accounts with Fidelity, Vanguard, and Schwab. (FDEWX vs VFFVX) or are they invested differently (different percentages of domestic vs international vs bonds allocations)? I just know a coworker, who is pretty wealthy, just purchased an annuity. I really think that I could do well with real estate, but it will consume a lot of time and additional stress. That might form part of your drawdown planning for later in life, but I'm thinking you might prefer to manage your risk just by asset allocation, while retaining control of your investments. But after that, adding an IRA to your retirement mix can provide you with more investment options and possibly lower fees than your 401(k) charges. Once you have bought into a fund, you can set up regular recurring contributions of a specific dollar amounts. Thanks again! I was trying to get a handle on whether or not there are any other investment opportunities out there besides the market and real estate. Annuities are more of a strategy for guaranteeing a certain amount of income, with the drawback that you lose control of the principal. After maxing out my 401K and Roth IRA what other tax deferred vehicles do you recommend? If your emergency savings is up to snuff and you've looked into an HSA … A Roth IRA isn’t deductible, but that can work to your advantage if you expect your income to go up over time. Please contact the moderators of this subreddit if you have any questions or concerns. Doesn't really matter. I've been pooling any extra money into my brokerage (ETF's / passion funds... clean energy for example) and have done really well so far. Now I’m trying to figure out how/what to invest outside of pre tax 401k and my Roth IRA. The great thing about a 401k is that you are contributing with pre-tax money. Both agree and disagree. Any of those should be fine selections. All of the rebalancing the fund managers do will generate taxable events for you. I am also not opposed to getting into real estate...buying homes in disrepair, fixing them up, and flipping them or renting them out. https://fundresearch.fidelity.com/mutual-funds/summary/92202E847. After maxing out IRA and pre-tax 401k contributions should I invest in a separate taxable brokerage account or is it better to invest in after tax contributions to my 401k? That being said, I started with Vanguard and have done well with my investments with them so far, which makes them more familiar and appealing. Yep, you may be able to put money into a traditional or Roth IRA even if you have a workplace 401 (k). Most people I know use/praise Vanguard but are they really any different than Fidelity? Individual retirement accountscan be a great tool to supplement your 401(k) contributions and you can enjoy some tax benefits in the process. I'm in the same position actually and am thinking of doing a balance between after tax 401k and taxable brokerage investments. Your investments grow at 8% per year,which is a pretty good 401(k) rate of return . Not sure what your limits are but isually 401k is $19k/year, and roth $6k/year. That is actually good advice that I never really think about. Your 401(k) and traditional IRA withdrawals, on the other hand, are taxable. You can go a few different directions. It does offer flexibility in withdrawals though so that you're not as limited to the conditions set by the 401k. I am pretty handy with my hands and have been in the construction since I was 20 so it seems like a logical step. By using our Services or clicking I agree, you agree to our use of cookies. Broker doesn’t matter much anymore. Also, these funds only trade at the closing price at the end of the market day. Why jot set a goal amount per fund and then move to the next? I'd split your money across a few brokerages. The site may not work properly if you don't, If you do not update your browser, we suggest you visit, Press J to jump to the feed. They show how much is domestic, international and bonds. Press question mark to learn the rest of the keyboard shortcuts. Say $5k? Look at the website for the funds you are considering. If you're willing to do that, I think it's worth a shot. Mutual funds or ETFs for taxable accounts? Fidelity's website looks like it was made 10 years ago and they haven't made a change since. I max out their 529s (10k can be deducted from State tax). In most cases, passive investments are better than mutual funds because they are cheaper and perform better. My employer contributes 10 percent of my annual salary to my 401k, so that's an additional $8,500. My total net worth is $325,000 including my paid off condo ($100,000). Longer term, you could just invest it in the same funds as your Roth IRA and/or 401 (k) … My contributions to both retirement accounts are $23,500 per year. Thank you for the advice. Perhaps there are other investments strategies out there that others are doing that I am missing. Can I withdrawal the principal amount of after tax contributions of my 401k like I can with a Roth IRA? With my lifestyle, my monthly discretionary income is roughly $1200. If your 401(k) plan is a dud, you have better options. For 401k accounts, this amount currently stands at $16,500 a year if you are under age 50, and $22,000 a year if you are over age 50.For Roth IRAs, the limit is considerably less. If a financial advisor must be used, try and find a fee-only fiduciary that does not make commission, but instead only charges a per-service fee. It's typically not worth it if you would have to transfer funds between different companies. Here are a few reasons why you may want to avoid putting all of your eggs in the traditional retirement account basket:1. Some people want to set it and forget it and pick a target date fund. There is an IRS limit on the amount of aftertax money that can be contributed to a 401(k), but your employer may not allow you to contribute more than the federal limit of $19,500 for 2020 and 2021. It is refreshing to read a post from someone in your shoes, because you are in a very strong position now, with a paid-off mortgage and fully funded retirement plans already creating a broadly diversified portfolio. From the personalfinance community wealthy, just purchased an annuity that out option if you want to set it forget... 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