Does it makes sense to ask... how am I doing ?

[markio26]

Re: Does it makes sense to ask... how am I doing ?

i just want enough money to live well.. i don't shoot for the million dollar goal anymore....

[syracusa]

Re: Does it makes sense to ask... how am I doing ?

Minimal debt --> only the mortgage, which is shrinking every month

Hmm...well, with this one - "not really".
We are on a "interest only" mortgage currently - which I know it is not ideal but we got on this one because this was the only way we could get into this particular house at the time we moved.
We have about 2 more years like this and then we have to refinance to a regular, fixed-interest mortgage.
Our house did appreciate quite a bit compared to the one we had moved from, so we still made money.
We plan to move next year and then we will have a regular mortgage - but then again, right now the housing market is dead. Need to sell this one before we move into another one.

Hopefully it will change by next summer when we plan to move.

Thank you again everyone. I really need to learn about this investing thing before I open the Roth IRA.

But, speaking of the IRA/ RothIRA - my husband asked me: would you rather pay taxes now or then?
I don't remember exactly what I answered because I didn't understand very clearly what this was about, but to him it sounded better to pay taxes then, that is to have a regular IRA.

[syracusa]

Re: Does it makes sense to ask... how am I doing ?

Fidelity allows you to direct your money w/i certain funds. If you go w/their managed account then they do the work for you.

Something for you to look at is their age-targeted funds say if you plan to retire in 2045 then that's the year fund you look at investing in.

One good diversified fund that they have is the Four-In-One Fund that tracks four of the top indexes - The Hubster and I started with it and then have progressed from there. You get on Fidelity's website and start reading, study at some of the places that were listed in the thread on this site about good investing websites and begin learning. No one will take as good a care of your money as you will - if you get involved in learning about investments.

http://www.savingadvice.com/forums/s...ad.php?t=23296

Thanks for the link. I reviewed some of recommendations there and I noticed "The only Investment Guide You'll Ever Need' by Andrew Tobias. I have this one, I have read it before and it was very inspirational, funny and reassuring - but at the time I was only in the "build up some savings" stage. I read the investment part too (just FMY ) - but I didn't really study it up because I had little reason to at the time.

I will now.

Thank you again.

[Squantum]

Re: Does it makes sense to ask... how am I doing ?

Hmm...well, with this one - "not really".


But, speaking of the IRA/ RothIRA - my husband asked me: would you rather pay taxes now or then?
I don't remember exactly what I answered because I didn't understand very clearly what this was about, but to him it sounded better to pay taxes then, that is to have a regular IRA.

The thing is, if you pay taxes now, you'll pay it on your $4,000 a year or whatever you put in. Say you contribute for 10 years (just an example). You pay taxes on $40K, right, at whatever your rate is. Then, you invest it -- say you make an 8% return -- you don't pay taxes on that 8% return!

If you invest in a traditional IRA, you may not have to pay taxes now (there are eligibility requirements for this -- income limits and whether you have a retirement account at work, as far as I recall), but you'll have to pay taxes on it when it comes out, including all of the gains from your investments.

That's why so many people like the Roth IRA.

[safari]

Re: Does it makes sense to ask... how am I doing ?

If you have many years before the retirement, Roth IRA makes a lot more sense. For example, suppose you plan to retire in 30 years. If you contribute $4,000 a year to Roth IRA, in 30 years the total sum that you will have contributed is going to be $120K, and that's will be the total amount you will have paid taxes on. Assuming a pretty conservative return of 8% on your investment, in 30 years you're going to have over $489K in your account, and you won't have to pay any taxes when you withdraw that money. Now if you choose to invest your $4K a year in a traditional IRA account, when you retire, the entire $489K will be taxable, compared to $120K in case of Roth IRA. Quite a difference! In addition, if your investments perform well, with a Roth IRA you will still pay taxes only on the money that you invest ($120K), regardless of how much you gain. For example, if you earn 12% annualized return on your investment, in 30 years you're going to have $1.081 Mil in your account, which you can withdraw tax-free. However, with a traditional IRA, that entire amount would be taxable. Hope this helps you convince your husband that Roth IRA is a better choice.

[tinapbeana]

Re: Does it makes sense to ask... how am I doing ?

nicely put safari!

[Broken Arrow]

Re: Does it makes sense to ask... how am I doing ?

Roth also makes sense if you believe that you will make more later than what you are making now.

Of course, while Roth is perhaps the better choice most of the time, it isn't always the case. Please empower yourself before making a move.

[syracusa]

Re: Does it makes sense to ask... how am I doing ?

I wonder if it is possible to roll over the money I have in that employer's plan directly into a Roth IRA? ...
Or does it have to be a Rollover IRA which later will have to be converted into a Roth IRA?

Boy...adventures in capitalism...

My parents, under the socialist system, knew this:

1. Go to work.
2. Retire (early - women 55, some even 53, men a tad later).
3. Government pays pension.
4. The end

[tinapbeana]

Re: Does it makes sense to ask... how am I doing ?

I wonder if it is possible to roll over the money I have in that employer's plan directly into a Roth IRA? ...
Or does it have to be a Rollover IRA which later will have to be converted into a Roth IRA?

well, assuming your employer's plan is a 401k, you'll have to go 401k -> regular IRA -> Roth IRA (and then pay taxes on the amount, since the 401k and regular IRA are pre-tax whereas a roth is post-tax money).

[syracusa]

Re: Does it makes sense to ask... how am I doing ?

well, assuming your employer's plan is a 401k, you'll have to go 401k -> regular IRA -> Roth IRA (and then pay taxes on the amount, since the 401k and regular IRA are pre-tax whereas a roth is post-tax money).

Actually that employer's plan was not a 401K.
It is called Georgia ORP, I worked for the state. Is it the same thing?

[tinapbeana]

Re: Does it makes sense to ask... how am I doing ?

Actually that employer's plan was not a 401K.
It is called Georgia ORP, I worked for the state. Is it the same thing?

i'm not sure but that sounds like it might be a pension plan of some sort, which means it'll probably have different regulations. i would recommend you talk to the company that oversees the plan, your personal accountant, or both. they should be able to let you know what your options are regarding this type of plan.

[Broken Arrow]

Re: Does it makes sense to ask... how am I doing ?

Actually that employer's plan was not a 401K.
It is called Georgia ORP, I worked for the state. Is it the same thing?

Are you a teacher or professor?

This website might provide a clue as to what your options are. One option include:

You may request a direct transfer of your account to a qualified plan, such as an Individual Retirement Account (IRA). As long as the transfer is made directly from one vendor to another, no taxes will be withheld from your account. Be sure you understand the terms of your ORP contract before you make a transfer. Some accounts impose a surrender fee on an account withdrawal.

...which sounds about right. Still, I would simply talk to a representative from your employer just to be sure.

[syracusa]

Re: Does it makes sense to ask... how am I doing ?

Thanks a lot. I already have and it looks like I can rollover the money into a rollover IRA that I have already opened.

My husband suggests that I should leave this ORP plan as is, not roll over anything and just open a new Roth IRA and start contributing to it, if I want.

[creditcardfree]

Re: Does it makes sense to ask... how am I doing ?

An ORP (Optional Retirement Plan) is a qualified plan under codes 401(a) and 403(a). Because it is a qualified plan, as you found out, you can roll it over into your current rollover ira, a new rollover ira (from which you could convert to a roth), or leave it where it is.

Is the account at a major investment firm, such as Fidelity, Vanguard or TIAA-CREF? If it is, then you at least won't have problems contacting them regarding your account. Personally, I like simplicity, so I would roll it over into any existing rollover account, just to combine the funds. That, of course, is assuming you like the investment.

Your husbands suggestions are fine. You don't have to roll the money and convert it to start investing in a Roth.

[syracusa]

Re: Does it makes sense to ask... how am I doing ?

Thanks again!