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28y & just discovering my financial profile

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mattryan86
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28y & just discovering my financial profile  Reply with quote  

Hi there. I'm 28 years old, debt free, renting, living very conservatively, making $40K a year, expecting a raise in the near future at the company I've worked at for 5+ years. I've began to think about buying a house in 6+ years and thinking about retirement when the time comes. So far I've got 40K cash saved up in a CD account making 1.3% interest off it. I'm just now realizing that investing in index stocks have FAR BETTER interest rates than my CD account and should most likely benefit me in saving towards a down payment on a house in the not so distance future.

Furthermore, I've come to realize how disappointing my Roth IRA looks compared to other options I've found at brokers like Vanguard. I currently have:
The Growth Fund of America (AGTHX) = $1,031.04
The Investment Company of America (AIVSX) = $4,340.39
New Perspective Fund (ANWPX) = $938.08
That come with so many fees.....Annual Management Fees 0.24%, Other Expenses 0.14%, and Service 12b-1 0.23% That's a total of 0.66%!!! :'(

I also have a SEP-IRA that seems to get me nothing in interest...
SPAXX = $10,129

Any advice on how I can fix my current financial profile is greatly appreciated!!!
Matt Ryan
Post Thu Jan 29, 2015 3:20 am
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oldguy
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quote:
how disappointing my Roth IRA looks compared to other options I've found at brokers like Vanguard.


Yes - I would open a Roth at Vanguard and move all of those into their SP500 Index Fund.

And personally, I would move at least 3/4 of that CD into a taxable account, SP500 Index at Vanguard, it grows tax-deferred, accessible in a day.
Post Thu Jan 29, 2015 4:53 am
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mattryan86
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Why the SP500 Index Fund instead of a TDF?
Post Thu Jan 29, 2015 5:16 am
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oldguy
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More info pls - TDF?
Post Thu Jan 29, 2015 3:44 pm
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MrNewEngland
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quote:
Originally posted by oldguy
I would move at least 3/4 of that CD into a taxable account, SP500 Index at Vanguard, it grows tax-deferred.


Is this right?
Post Thu Jan 29, 2015 6:57 pm
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oldguy
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Mostly right -

The growth part of stock is tax-deferred -you pay the reduced capital gains tax on your profit if you sell - if you let it ride, the tax isn't due.

The SP500 Index has a longterm average return of about 11%/yr - about 9% is growth (deferred) and about 2% is a dividend, that part is taxed yearly.
Post Thu Jan 29, 2015 8:16 pm
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