This is where using tax advantage accounts can benefit you greatly. We can discuss this in more detail in later posting, but in general, you should take advantage of ROTH IRA and HSA accounts. Here are example of retirement accounts for your yearly contributions:
- 401K OR 403B (MAX $18,500 PER YEAR – MORE IF MATCH)
- IRAs (ROTH IRA IS PREFERRED VIA BACKDOOR IF INCOME TOO HIGH) (MAX $5,500 PER PERSON PER YEAR)
- HSA (MAX $3450 PER PERSON/ $6900 PER FAMILY PER YEAR)
- PUT THE REST IN TAXABLE INVESTMENT ACCOUNTS
Now what company and funds should you use? One simple answer = VANGUARD. Vanguard has well managed funds with the lowest fees in the industry and will help you grow your nest egg much faster.
At this point, you are ahead of most people. We are ready to move on to investment strategies, asset allocation and portfolio planning. Your goal is not only to beat the 3% inflation rate but make enough gain to meet your target retirement goal. Industry standard amount is around 6% annual gain, this is what most conservative financial planner can make you after they cut 1% off for advisor fees. You could keep those fee for yourself and make 7% or more! But first, what company and funds to use…