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Retirement savings. 403b/roth. 25 yo...

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  • Retirement savings. 403b/roth. 25 yo...

    I am a city employee and have a 403B plan. The city does not match anything. The money comes out of my account pre-taxed. I have just opened my account and am looking for advice. I have read books that say if my employer does not match then an Roth IRA might be a better option. Eather way I have a few questions:

    1....Should any of my money go into a fixed account (ours have 3% interetest). Like say...10% into a fixed account just for safety?

    2....Mutual funds/ stocks/ bonds etc. How agressive should I be at age 25? I read I should get less agressive as the years go by.

    3....If I decide to do a roth IRA instead of use my 403b who should I go to to open an account? I have read vanguard is good.

    4....Sorry for my ignorance. I am just starting to learn about my retirment. I know the sooner I start the better. I just dont know all the terms and concepts yet.

  • #2
    1....Should any of my money go into a fixed account (ours have 3% interetest). Like say...10% into a fixed account just for safety?
    I am a "Savings College Senior" here but I have to confess ignorance - what do you mean by a fixed account? Do you mean something with insured principal and one that's paying a fixed interest rate? Like a CD or bond?

    2....Mutual funds/ stocks/ bonds etc. How agressive should I be at age 25? I read I should get less agressive as the years go by.
    The consensus is aggressive on the spectrum, for retirement at age 25, unless you are market risk or principal risk adverse. Your personal preference should always override the general consensus.

    Why?

    Because in the end, it's YOUR money, not ours.


    3....If I decide to do a roth IRA instead of use my 403b who should I go to to open an account? I have read vanguard is good.
    The consenus here is T. Rowe Price, Vanguard or Fidelty. I use Schwab for my banking and my investments (you get to use any ATM for free; they reimburse you the fee). They are also good and I like having all my money in a central place and I can move from my checking to my brokerage account and then into my Roth or SEP-IRA.

    But any of those "Big 3" are good.

    Actually, I had my Roth at Janus for many years too when my ex-wife had her Roth at T. Rowe Price. Any good, no load mutual fund co. can set you up with a Roth.


    4....Sorry for my ignorance. I am just starting to learn about my retirment. I know the sooner I start the better. I just dont know all the terms and concepts yet.
    No problem. . .we can still communicate.

    As a side piece of advice, it can be a really complicated question - to go with

    A. A Roth IRA

    or

    B. A 403(b) without a co. match.

    If the co. matched, it would be a no-brainer. . .go with the 403(b) because the match is a no-risk return on your money that goes in. But since they don't, I would probably tip towards the Roth, unless at age 25, you are making a significant six figure salary and need the tax deduction now.

    Good luck and welcome.

    Comment


    • #3
      what is your tax bracket/income level? You are eligible for an IRA, but the Roth IRA has income limits.


      I would look to see how much risk you want to take investing, then work from there (that risk will tell you if 10% fixed is good enough, or if you need more...)

      Comment


      • #4
        the 403b and roth ira are very different in how they're taxed. if your city does not do matching i'd recommend a traditional IRA instead, as you may have a lot more options of where to invest. The 403b plans that your city works with may have limitations, on the companies, funds, etc.

        My preference is always the roth, but if you're looking for tax shelter now, a traditional roth, or even the 403b may be good tools.

        If you're looking for an investment firm, i'd say Vanguard, Fidelity or T-Rowe Price.

        I hope this helps.

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