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Invest in Roth IRA or 401k - first job
Posted on 5/3/16 at 11:48 pm
Posted on 5/3/16 at 11:48 pm
I am beginning my first full time job in a few months and have been reading a lot of threads on this board to gain information in regards to investing.
I know that I should contribute to my 401k at least to the amount that my employer will match. My question is should I also open a Roth IRA and contribute what I can to that or should I just max out what I can afford to contribute to my 401k?
Any opinions are much appreciate
I know that I should contribute to my 401k at least to the amount that my employer will match. My question is should I also open a Roth IRA and contribute what I can to that or should I just max out what I can afford to contribute to my 401k?
Any opinions are much appreciate
Posted on 5/3/16 at 11:53 pm to wrc12
401k up to match. Then max out Roth IRA.
You're (hopefully) making the least amount of money you ever will. That's when a Roth has the biggest benefit.
You're (hopefully) making the least amount of money you ever will. That's when a Roth has the biggest benefit.
Posted on 5/4/16 at 12:25 am to TigerDeBaiter
quote:
TigerDeBaiter
Ditto.
Posted on 5/4/16 at 12:25 am to TigerDeBaiter
quote:
401k up to match. Then max out Roth IRA.
^That. All it takes to max out a Roth is $5500, which is nothing. Like $106 a week?
Posted on 5/4/16 at 7:47 am to wrc12
Only going to reply because I was in your shoes at one point and it helped to hear many people reinforce what I later learned are the correct decision. Like the posters above said, employer 401k up to match then as much as you can to Roth IRA. Reasons: 401k more than likely has higher fees and less investment options. Roth IRA is also considered "more liquid" at the end of the day being able to withdraw principle at any point in time as long you meet a few criteria.
This post was edited on 5/4/16 at 7:48 am
Posted on 5/4/16 at 9:00 am to wrc12
Plus one to all previous statements.
Posted on 5/4/16 at 9:09 am to Costanza
401k to Match
Emergency Fund
Max ROTH IRA
Max 401k
Emergency Fund
Max ROTH IRA
Max 401k
Posted on 5/4/16 at 9:21 am to tissle
Can I set up a Roth IRA, say through Vanguard, that allows for direct deposit/contributions, or will I just have to make a manual lump contribution at some point during the year?
Posted on 5/4/16 at 9:42 am to fillmoregandt
Yes you can do an automatic reoccurring transfer
Posted on 5/4/16 at 10:15 am to tissle
quote:
401k to Match
Emergency Fund
Max ROTH IRA
Max 401k
depending on income, this is what I would. I honestly dont believe they will keep Roth's withdrawls tax free over the long term, so I might go a little bit harder with 401k. Best thing to do is to have both IMHO.
This post was edited on 5/4/16 at 10:22 am
Posted on 5/4/16 at 10:17 am to tissle
quote:
401k to Match
Emergency Fund
Max ROTH IRA
Max 401k
So you are saying I should have an Emergency Fund separate from my IRA contribution?
Say my income limits me to choosing between investing in my IRA or putting money aside in an emergency fund, which is the more beneficial option?
I have seen differing opinions on this board.
This post was edited on 5/4/16 at 10:20 am
Posted on 5/4/16 at 10:30 am to wrc12
quote:
So you are saying I should have an Emergency Fund separate from my IRA contribution?
Say my income limits me to choosing between investing in my IRA or putting money aside in an emergency fund, which is the more beneficial option?
I have seen differing opinions on this board.
Your ROTH IRA is retirement, not your emergency fund.
Everyone's personal finance choices are different - but what I personally did was:
1) 401k to Match
2) 3 Month Emergency Fund
3) MAX ROTH IRA
4) MAX 401k
5) Taxable Long Play Investments
6) Risky Play Investments (think penny stocks)
Posted on 5/4/16 at 12:57 pm to wrc12
Check with your employer to see if you have the Roth 401(k) option, it is becoming more common in retirement plans. If you do, I would elect contributions to go into a Roth 401(k) and obviously take advantage of your employer match. Max it out if you can afford to.
Posted on 5/4/16 at 1:05 pm to wrc12
Depending on investment options, max out your 401k assuming you have a roth option in your 401k account. It will have the lowest costs most likely.
There are additional expenses with an IRA that probably aren't worthwhile when you are just starting.
There are additional expenses with an IRA that probably aren't worthwhile when you are just starting.
Posted on 5/4/16 at 1:20 pm to notsince98
quote:
There are additional expenses with an IRA that probably aren't worthwhile when you are just starting.
What are you referring to here? Management fees on vanguard funds are usually a lot cheaper than your run of the mill 401k offerings.
Posted on 5/4/16 at 1:25 pm to fillmoregandt
quote:
Can I set up a Roth IRA, say through Vanguard, that allows for direct deposit/contributions, or will I just have to make a manual lump contribution at some point during the year?
Yes, and it's super easy.
I have mine set up to withdraw weekly. It's $105 and change. I feel that schedule makes contributing extremely "doable" "easy" whatever. It's the same amount in the long run, but a hundred bucks a week is like going out to nice (not even that nice) dinner once a week. It helps to put it in perspective and prioritize your spending.
Posted on 5/4/16 at 1:28 pm to TigerDeBaiter
quote:
What are you referring to here? Management fees on vanguard funds are usually a lot cheaper than your run of the mill 401k offerings.
Every company sponsored 401k plan I have had has included funds that have zero fees. Right now my work uses Schwab and I can invest in every Schwab fund (i stick to ETFs) with zero costs.
Depending on where you go (not everyone just jumps to vanguard) there can be maintenance or account fees on top of fund fees.
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