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Now that I have a Roth IRA, I don't know what to do with it!

January 20th, 2012 at 09:02 am

So I easily opened my Roth with Fidelity the other day. I transferred $1,000 into it with the leftover bonus money instead of paying Discover extra. I realized I'm better off maxing my Roth for 2011 and worrying about the CC debt later. I think I'll be fine paying them off before the interest increases so it makes more sense to me.

But now I have this Roth and no idea what to do with it. My Traditional IRA is also with Fidelity and they do all the work with it. I've seen it steadily increase over time but there are people trading, etc. I put the money into a Freedom 2050 account and am being aggressive with the money since I'm young.

I need to do a lot more research on my IRA. Looking at basic investment account information, I know I want a Roth but I don't know how or what to invest in or if I need to do any work at all.

That'll be my project for this weekend. I'm also talking to my BF, trying to get him to also get a Roth and fund it by April. He has the cash sitting in his account so it wouldn't be too hard for him. Open account, transfer money. In fact, he could fully fund 2011 and 2012 right now and pay off his truck and student loan if he had the motivation to make the transfers. It might take more prodding then I think.

5 Responses to “Now that I have a Roth IRA, I don't know what to do with it!”

  1. PatientSaver Says:

    Well, since the Roth is long-term money, along with your traditional IRAs and 401k, you should consider them all together as a group.

    You need to figure out what a reasonable asset allocation is for you, based on your time horizon and tolerance for risk. I'm not sure of your age, but you said you are young, so you might go with a fairly aggressive allocation of 75% stock mutual funds with the balance in bonds and/or cash. I'm not saying this is definitely right for you, but just using it as an example.

    So once you figure out your allocation, you would then figure out how to put that allocation in play among your existing funds, or with new funds, if need be.

    If you're unsure what your current funds are characterized as (growth, income, balance, fixed, etc), you can go to the fidelity website and look it up.

  2. scrappytappy Says:

    Thanks, PatientSaver! I'm fairly young (27) and set up my Traditional IRA 4 years ago. It is set to invest in a Fidelity Freedom account. I didn't realize that Roth's and Traditional's can invest in the same Fund. Just called Fidelity and set up my Roth to invest in this Fund, too. I know way too little about retirement investments so I still plan on learning more about them and deciding if I want the money to be somewhere else.

    The thing I like about the Freedom Fund is that is changes how conservative/aggressive you are as you get older so there is little guess work for me. The down side is that I know nothing about the stock market/investments and I'm putting my money in someone else's hands.

    Right now, the Freedom Fund I have uses an aggressive plan; about 75% in stocks the rest in bonds. I think a similar plan of action for the Roth is good for me.

    Thanks for the advice: it was super easy to set everything up and decide to contribute now. I know this will be a HUGE advantage for me in the long term Smile

  3. patientsaver Says:

    You know, I was feeling a little uneasy after I read about your credit card debt. I may have told you to go for it without seeing the full picture. I see all the details now on your sidebar. Luckily, you are paying next to nothing in interest for now. I didn't realize you had CC debt when you were talking about getting a Roth IRA.

    The Roth IRA is great. I guess I just wanted to encourage you not to lose sight of your goal to pay off those cards before the rates bump up. Becus CC debt can get out of hand real easy.

  4. scrappytappy Says:

    Thanks for your concern, patientsaver! It feels good to know that people on SA are so kind!

    I jumped into the Roth because I know I'll be able to pay the CC debts off before high interest hits. Right now, I pay about $8.00 a month in interest. Even if it takes me until March of next year to pay off that credit card (which I don't think it will), I will only pay $104 in interest. I think the long term benefits of getting my Roth set up and funded now will pay off way beyond the $104.

    Often what happens with a lot of people with CC debt is that they will "worry about retirement" later. I know that's been my mantra all along. My mom is in her late 50s and has NOTHING to speak of in terms of savings. No EF, no retirement, no 401k. Once I realized I don't have a lot of interest on my CCs right now, I feel like now is as good a time as any. I can always stop contributing if I need to. It's as much as I want or can afford to contribute.

    Part of my security lies in the fact that I know how serious I am about my financial self right now and I feel confident that I won't fall off the wagon. Smile

  5. patientsaver Says:

    OK. You sound very determined and clear about your goals. That's good. Smile

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