What should I do?

[docstudent]

My current salary is $125,000 and I take home $7080 per month. The following is a breakdown of my current monthly bills. I was previously contributing to a 403b, but my current employer does not offer it as an option. To date, I’m contributing $2500 monthly to my Robinhood account. Is there a better route to invest based on my situation? Single, no kids.

Mortgage, $1445 (included $150 extra), $171, 250 (worth between $405,000 to $420,000)
HOA: $365
Car note: $499 ($21,000)
Insurance: $182
Gym: $204
Phone: $65
Cable: $29, Netflix $9, Electricity $35
Food: $425
Gas: $150
Monthly investment: $2500 (Will increase to $3000 in March).
Misc $650 (Entertainment, home/life insurance, travel, emergencies, etc.)


Savings: $41,119
Robinhood: $35,612
403b 1, $78, 000, 403b (2) $23,000, 403b (3) $22,000
STRS, $145,000 (Should net me 5G a month if I stick to my retirement date of 2030). If I work to 55 (2032), it will increase to $600 to $700 per month.

[myrdale]

It's not really clear what you mean when you say you contribute to the Robinhood account. Are you just buying stocks?

First and foremost I would recommend you open a Roth IRA account. I would consider maxing this out each year before putting money into the market (outside of future 403b or 401k).

I've never heard of STRS. State Teachers Retirement System? I guess this is a pension? I'm just dubious of someone else directing my retirement.

I don't have experience with 403b's, but having three separate accounts seems cumbersome. Is it worth combining these all into the same account?

I am always going to say work towards being debt free. Kill that car loan. I might not take the Dave Ramsey approach and say take it out of the $41k savings today, but I would not have it around by this time next year. Pay it off before summer.

$200 per month for the gym? That is almost how much I pay per year!

$365 per month HOA? I just don't get it.

[docstudent]

I’m investing $2500 per month into my Robinhood account, mainly focused on Apple/ Microsoft and the EV market. I’m up 20% overall and that’s been my average for the past year and a half. If not, the money would go my savings and gain very little in interest. I’m researching the ROTH IRA and hopefully that will be a good match for me.

Gym: I go five times a week and I believe it’s worthwhile overall. At the moment, I can’t rollover the 403bs to a single account because I’m not currently enrolled in a plan. The interest rate on the car is insanely low, but the aim is to pay off sooner opposed to later.

[disneysteve]

I can’t rollover the 403bs to a single account because I’m not currently enrolled in a plan.

You could roll them over into an IRA.

[disneysteve]

I'd definitely recommend a Roth over taxable investing. Your income is low enough to qualify (MAGI under 129K for a single person). Even if you're planning early retirement, you'll be able to access the Roth funds at any age if needed. You can withdraw contributions; you just can't withdraw earnings until 59.5. Of course, you can only put $6,000 into the Roth so you'd max it out by the 3rd month, but after that you can go back to your Robinhood account.

Whether or not you should accelerate any debt repayment depends on the interest rates. If the car and mortgage are both fairly low, just keep making the payments.

Interesting that your current employer has no retirement plan. What sort of entity is that?

[bjl584]

I echo the others with the ROTH suggestion
Also suggested, but I'd clean up all those old 403b plans and roll them into a single IRA

What are you buying with the $2500 a month?

[Jluke]

Roth was the first thing to come to mind when reading the first post but as expected others noted that.

I would just add that if your income qualifies you to contribute in 2021 and 2022 be sure to make a 2021 contribution (if that is allowed since you didn’t have a Roth open in 2021 so that might be a catch).

[docstudent]

My previous employers all offered access to a 403b option. However, my new employer has not set up an allocation system. I inquired early on, but it doesn’t seem like they are going to set it up. I contribute a predetermined amount to STRS and they do the same. At the moment, I invest $2500 and mainly focus on Apple/ Microsoft and I made a significant gain in the EV sector. I made better returns than my Vangaurd 403b account over the same time span and the two other option. Overtime, stocks “normally” show gains in the long term. In the Fall, I should be able to negotiate a base pay around the $135,000 to $140,000 and I should have closer to $3500 to invest on a monthly basis.

[disneysteve]

In the Fall, I should be able to negotiate a base pay around the $135,000 to $140,000 and I should have closer to $3500 to invest on a monthly basis.

If that's the case, it may be best to hold off on funding a Roth for 2022 just in case your income for the year goes over the limit. But once you know the number, you have until 4/15/23 to fund the account for 2022. And as Jluke said, you have until 4/15/22 to fund a Roth for 2021. As long as you met the income limit last year, you should at least do that.

[kork13]

If you already have accounts with Vanguard, just open up a traditional IRA with Vanguard then roll your old 403b's into it. That'll make your financial life MUCH simpler, cleaner, and more flexible. That account can hold all of your old money.

For new money, start a Roth IRA & fund it ASAP for 2021 & probably 2022 as well (a pay increase in the Fall probably wouldn't push you above the limit for this year). If you find yourself above the Roth IRA contribution limit, you can start adding new money to the traditional IRA instead.

And FWIW, you're single/no kids, great income, and use the gym frequently. If you find $200/mo worth it, more power to you -- no complaints from me. Although I personally loathe debt & never want it hanging over my head, you probably aren't hurting yourself by keeping low-interest (<3%) debt on the car & house.

I would argue that you should reconsider sending so much of your investing money into just a few tech stocks. I would urge you to put at least a sizeable chunk of that money (>50%... on the low end) into more diversified mutual funds... A simple S&P 500 index fund would do the job -- BTW, the S&P 500 has also earned about 20% per year for the last 2 years. sooooo..... I'd take the less risky route if it means comparable results.

[myrdale]

For new money, start a Roth IRA & fund it ASAP for 2021 & probably 2022 as well (a pay increase in the Fall probably wouldn't push you above the limit for this year). If you find yourself above the Roth IRA contribution limit, you can start adding new money to the traditional IRA instead.

This is actually a really good point. I was mistaken in my believe that contributions ended December 31 each year. It is April 15.

Just as Kork said, max out 2021 ASAP!

[LivingAlmostLarge]

Are you sure you qualify for a roth ira?

[docstudent]

I have to double check the requirements, but I know I’m going make much more money in the Fall. I undershot my initial salary range and they gave me the lower end. However, after I dug a littler deeper I really missed the mark and should have requested more. I’m only making $125,000 and I’m hopeful that below the salary cap.

[ryan_themoneyguy]

Looks like you're in great shape! In terms of investing, now that you can no longer contribute to your 403b, I'd suggest opening a Roth IRA and maxing it out to benefit from tax-free gains when you retire. Also, if you have the option to invest via an HSA, that could benefit you as well as that money can be used for health-related expenses or withdrawn for any reason during retirement. Finally, investing through Robinhood can be great, as long as the funds you're transferring into your account are then being invested.

[riverwed070707]

Sorry if I missed it but how old are you? Is your Robinhood account a taxable brokerage? Others have already noted a Roth. I'd also be opening a personal IRA and maxing. Depending on your age, your retirement savings seems low. Your budget also seems to be missing $800-ish ... where is that going?

What does $4400 in HOA fees get you? I'd think it at least included a gym membership For me, I'd be moving to somewhere without an HOA