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Roth IRA

April 11th, 2011 at 12:21 am

Hello, everyone. I have been noticing that even though I am contributing faithfully to my 401K every month through my job, that I would like to increase my retirement income possibilities.

First, though, I need to get the regular emergency savings up to at least $1000 and get rid of some liabilities, including getting the lawn mower and my medical bill paid off. I will also make a significant payment to the credit card. The lawn mower, medical bill, and credit card are slated to happen in June. The emergency fund is already in progress.

Later this year, after all this is accomplished, I want to open a Roth IRA and contribute about $500 a year to start. I would like to invest it in ETFs. When I went to my retirement company website, it looks like I can basically mail in contributions whenever I want, like monthly, quarterly, or right before tax time. For those who actually do have one, is it easier to contribute say monthly so that $50 or $100 is not as painful as $2000. What do you think?

Posted in Goals | 5 Comments »

5 Responses to “Roth IRA”

  1. FrugalTexan75 Says:
    April 11th, 2011 at 01:01 am 1302483687
    1302483687

    Personally, I would go for the $50/mo versus the large amount at once. It would first of all be a lot easier to see $50 go than $2000, and second of all it allows you to take advantage of dollar cost averaging. (In other words, if what you are buying is at an all time high one month and you buy into it for $50, it might be a lot lower the next month, so you'd get more. But if you bought it all at one shot, then you get it for whatever it costs right then.)

  2. creditcardfree Says:
    April 11th, 2011 at 02:00 am 1302487230
    1302487230

    We send money in automatically every month to reach our retirement goal for the year...and we never stop the contributions for anything!

  3. Petunia 100 Says:
    April 11th, 2011 at 04:36 am 1302496602
    1302496602

    If you are going to be charged a brokerage commission for each transaction, then you want to do a lump sum as infrequently as possible. If your broker will not charge a commission, then a transaction once a month is the way to go.

    Do you know what your broker will charge you?

  4. MonkeyMama Says:
    April 11th, 2011 at 02:53 pm 1302533591
    1302533591

    I personally put a set amount every month (10% income at current). Because I need my paycheck to fund it.

    It is generally best to fund it up front if you can.

    If you were waiting to save the $500 and then fund it? It is much easier to send it in a little piece at a time. That way, it doesn't get diverted elsewhere, and you are in the market sooner.

    That said, when I had a 401k or something similar, I would just lump sum our IRAs after the end of the year (before April 15th). We would decide how much extra we could afford to put in after the year was over.

    So, basically, I say do whatever works for you. Every method has their place!

  5. Jerry Says:
    May 13th, 2011 at 08:41 pm 1305319263
    1305319263

    I think you are on the right track no matter what you choose, because you are doing things that will lead you to the desired outcome. The payoff of the bills (CC, mower, non- insurance medical) will draw you even closer. Keep up the great work, you are a solid example for people!
    Jerry

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