Tuesday, March 27, 2007
Baby Step Four
Baby Step Four~ Invest 15% on household income into Roth IRA's and pre-tax retirement.
1) Fund 401K or other employer plan IF they match and fund the amount equal to the match.
2)Above the match amount, fund ROTH IRAs. If there is no match, start with ROTH IRAs. Why a ROTH? The Roth IRA is an after tax IRA that grows TAX FREE!
3)Complete 15% of income by going to company plans.
Military folks, Dave says TSP (Thrift Savings) is a good thing, do that too to get to your 15%!
Remember an IRA is not a type of investment at a bank, it is the tax treatment on any type of investment. Make sure you are diversifying. Dave recommends 25% in each of these four categories: growth & income (Large cap), growth (Mid cap), international, & aggressive growth (small cap). Mutual Funds are a great way to go!
1) Fund 401K or other employer plan IF they match and fund the amount equal to the match.
2)Above the match amount, fund ROTH IRAs. If there is no match, start with ROTH IRAs. Why a ROTH? The Roth IRA is an after tax IRA that grows TAX FREE!
3)Complete 15% of income by going to company plans.
Military folks, Dave says TSP (Thrift Savings) is a good thing, do that too to get to your 15%!
Remember an IRA is not a type of investment at a bank, it is the tax treatment on any type of investment. Make sure you are diversifying. Dave recommends 25% in each of these four categories: growth & income (Large cap), growth (Mid cap), international, & aggressive growth (small cap). Mutual Funds are a great way to go!
Labels: financial
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2 Comments:
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At March 27, 2007 6:50 PM,
Sallie said...
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We have had better returns on TSP than anything else it seems.. the other stuff earns money but not nearly at the rate of our TSP..
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At March 27, 2007 7:03 PM,
MamaArcher said...
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oned TSP is a good thing, make sure it is diversified well. I do not know what interest rate you are averaging on that but I know mutual funds can earn 12%, I have talked to people who get that..and if you have that in your ROTH IRA, it is at a better advantage because of taxes. That is why the ROTH is so good. You pay taxes on the $ b4 it goes in, so anything earned is tax free, with the TSP you have to pay taxes on the $ as it comes out. That is the big difference.
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