Ok, I max my Roth IRA, but I want another investment besides a retirement account. It does need to be liquid, because while I have good job security, I don't have much money in savings (maybe 2 months worth, tops).

I'm thinking about going with USAA's Income Stock Fund. My understanding of this sort of thing is that it compounds like an IRA, but pays you dividends (which you can either take or re-invest into it). Am I understanding this correctly?

Also, I have 15 (I believe) shares of Red Hat. Is there any reason not to sell them whenever Red Hat stock is looking pretty good, and re-invest that money into the mutual fund?

3/14/2006 11:00:01 AM

It's definitely about selling time for Red Hat.

3/14/2006 11:06:35 AM

I max my Roth and am trying to match my employer matching on my 401k. I like the 401k simply for the matching and the tax benefits. My problem is my company 401k requires 15,000/year to max out the matching...pretty expensive for a 401k matching.

3/14/2006 8:42:05 PM

yeah, except its basically a free raise

3/14/2006 9:10:02 PM

If liquidity is what you're going for, I would recommend the Emigrant Direct money market account: http://www.emigrantdirect.com/

With stocks or a mutual fund, if you pull out too fast there will be short-term capital gains taxes that will likely mitigate any advantage that you would have over the above account. You also have the prospect of facing a loss in the short term.

Quote :

"My problem is my company 401k requires 15,000/year to max out the matching"

I think you have this policy misunderstood. $15k is the maximum contribution that you can make this year per IRS regulation.

3/14/2006 9:54:08 PM

buy QQQQ

3/14/2006 9:56:21 PM

actually, my company does only match 10% up to the 15k. So to get it all I have to max it out. I'm thinking 15k in the 401k and 4k in the Roth should be fine. Invested aggressivley for now.

3/14/2006 10:00:39 PM

youve got the right idea. you should, in this order:

1. max out your employers matching provision for your 401k
2. max out the Roth
3. if you are doing both of those, sink some more into the 401k, any funds in there are tax deferred.

i would also strongly consider selling the red hat and investing in a no-load tech fund (if technology is where you want to have your money)

^^^ agreed. i dont think any employer in their right mind could afford to match 15k/year

[Edited on March 14, 2006 at 10:38 PM. Reason : .]

3/14/2006 10:36:29 PM

scratch that, i see they only match 10% of what you put in

sucks

[Edited on March 14, 2006 at 10:44 PM. Reason : .]

3/14/2006 10:43:33 PM

Quote :

"youve got the right idea. you should, in this order: 1. max out your employers matching provision for your 401k 2. max out the Roth 3. if you are doing both of those, sink some more into the 401k, any funds in there are tax deferred. i would also strongly consider selling the red hat and investing in a no-load tech fund (if technology is where you want to have your money)"

i'm active duty USMC...no 401k. Roth is maxed. I don't have any particular allegience to tech stocks...I'm all about what makes me the most $$$.

3/14/2006 10:47:08 PM

ah, didnt know military didnt have 401k. do they still have pension plans? or what?

3/14/2006 10:52:05 PM

if you do 20 years +, you have a retirement

and there is the federal employee Thrift Savings Plan


but i'm not looking for retirement savings so much...i'm looking for shorter term.

3/14/2006 11:22:18 PM

get on http://www.morningstar.com and look up any funds you are interested in. btw, if you already know this sorry. that USAA fund looks good in that it is no-load and fairly low expense ratio, but it has a turnover ratio of 73% which is really going to hurt you tax wise.
after looking at their Growth and Growth and Income funds (with turnover ratios of 81% and 128% respectively) it seems like a vast majority of USAA's funds are high-turnover, which is generally something you want to avoid in a non-tax deferred account

3/14/2006 11:52:56 PM

buy QQQQ

3/15/2006 1:14:47 PM

buy DVY

3/15/2006 2:21:33 PM

oh, and when I say shorter term, I mean like 15-20 years, as opposed to retirement savings.


the other variable is that I'll be buying a house when I get to a permanent duty station in about 2 years. How much should do I really need for the down payment? that affects how much I can invest.

3/20/2006 10:37:26 AM

mutual funds are bogus, few are good. your just paying brokers, invest in a diversified portfolio and then you will have your own mutual fund

3/20/2006 12:17:40 PM

^^you really don't need a penny for a down payment if your credit/income is good enough to qualify for a 100% loan on whatever house you want. all you need is closing costs/pre pays, which typically adds up to roughly 3% of the sales price. that said, alot of first time home buyer programs, new home builders, etc. offer closing cost assistance. for example, where i work it's possible for a customer to get a 150-200k house and only lay out maybe 1500-2000.

3/20/2006 3:50:03 PM

Quote :

"mutual funds are bogus, few are good. your just paying brokers,"

i am pretending like i didn't just read that

-ZiP!-

3/21/2006 5:21:56 PM