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Traditional IRA Investment Help

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5 replies to this topic

#1 creditmaze

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Posted 31 August 2017 - 05:14 PM

I set up a traditional IRA with Chase in 2016. I contributed the maximum of $6500 for tax year 2016. The interest is horrible at 0.01% and I checked it online and thus far I've made a wopping .27 cents on $6500 contribution.

For 2017 tax year I set up another IRA with Alliant CU at 1.104%.

Because of my age (61 yrs), I don't wish to assume a lot of risk with a high performing IRA investment. I have about ten years left to contribute to retirement savings.

My question is do you think Alliant IRA is best at 1.104% interest or if you were me would you instead go with Vanguard and try to minic Warren Buffett's stragegy?

#2 bjk123

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Posted 01 September 2017 - 08:23 AM

I really depends on your risk tolerance.  I'm pretty sure what you've got now isn't even keeping up with inflation.  Using Vanguard as an example, the savings is in the mutual funds and ETFs and not in the individual stocks (unless you have enough invested to waive the trading fees).  They also don't allow automatic investment in EFTs, only in the mutual funds.  So to build your own portfolio to match a particular investment strategy you'd have to have the minimum required for each mutual fund or do manual investing.   But even going with a single blended fund like the conservative or income life strategy funds would blow your bank returns out of the water. 


I am not a financial planner, and my only experience is in managing my own investments, so do take care to carefully examine your own financial picture prior to making any changes. 

#3 Zanshiro


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Posted 01 September 2017 - 09:30 AM

Much like bjk, my own experience is managing my own investments, but I have built my portfolio VERY slowly over time - I say that because one of my first 'major' jobs as a child was with Wal-Mart, and using the ESPP (Employee Stock Purchase Plan) since I don't see that acronym on the lists) I put in a lot when I was staying with the parents, knowing I didn't have overhead expenses at the time.  They matched 20% of what I put into it, so I built up several hundred shares while I was in college, and have held them continuously as part of my blue chip/dividend giant strategy.  I also hold heavy shares in AT&T, for the same reason.  I consider the big blue chips that pay regular dividends safer investments, and the market being as bullish as it has certainly has made great profits in the last 12 years.  I think I'm one who's waiting on this giant bubble to burst, though I've been keeping my Roth and regular 401k contributions around 7% now that debt's back under control, it is supplemented by my own stock investments as an individual buyer, and one with higher risk I've taken that I personally like is Novavax.  I'm liking what I see with their potential RSV vaccine, and trading at about $1/share right now down from $8, I think if that vaccine passes clinical trials it can save a lot of lives (Yay for concious investing) while also being the sole product in a $40+ billion dollar industry (Yay for financial investing too).  I'm holding about a thousand position, so I figure worst case scenario, I take a $1000 hit bought in at $1/share.  Best case, it takes off like the next big pharma, and return is multiplied over time...but that likely won't happen until 2019 when/if that vaccine's passed FDA trials and released. 


I look long term at companies for things like that.  For safer ones, most CUs even have around a 3% set of CDs or savings accounts you can get into.  Especially if you don't mind having your money separated a bit to maximize those returns.  Last I knew, Lake Michigan CU in Grand Rapids still offers their 3% APY checking account, under $15,000, then drops to 0% after that.  So drop 14k there, and it can sit a while and build at a steady rate.  Northpointe Bank, also in Grand Rapids, likely competing with LMCU, offers just under 5% on the first $5,000 in the account, then goes up to 0.1% - Yes, pattern here: most of these offers drop drastically if you surpass the 'limit' set.  Discover has a deal you can deposit $20,000 at their bank and get $200 bonus (So that's 1% off the jump), and they offer a 1.15% APY, so it's marginally better.  The oft-maligned Synchrony Bank actually offers a decent CD IMO, with $25,000, it does 2.35% APY.  

Mind you, I haven't gone with most of these, as at my age, I'm into the higher risk/higher return fields still, but I definitely look at this, and as cash on hand grows, and debts are cleared, I will be seeking reinvestments and the like, as well as places to store things with good rates of return when it's not in use :)

#4 creditmaze

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Posted 01 September 2017 - 11:39 AM


Any thoughts on this from Vanguard? It is somewhat modeled off of Buffet. It has more risk for my age group but still would appreciate your thoughts.

I am very inexperienced in investing but I do understand there are no guarantees on return of investment. Thanks so much!

#5 bjk123

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Posted 06 September 2017 - 09:34 AM

I have the longer-term portion of my HSA invested in the Fidelity version of that fund, and for my 15+ year time table it's been great.  There were a few times in the early going when the investment was worth less than what I put in, but I was able to ride it out and recover. 


Based on what you said you put in an IRA last year, you may have enough ($10k) to qualify for the Admiral version of that fund which will give you even lower costs.  If you don't have that much right now, you can open with investor shares and then once you reach the minimum you can do an in place "upgrade" to the better version.


When I was starting out with my IRA, I chose to go with one of the more aggressive blended funds.  I've since moved on to managing things more closely myself, but it was a great "starter" fund when I didn't feel confident in what I needed to be doing.


It is all down to the question of whether your chosen investment has the ability to leave you with enough money when you retire as well as whether you can handle the projected losses if the market tanks.  


As an aside, take a look at any hidden resources you may have available to you.  My local CU has free wealth management folks that can act as a sounding board, and my employer gives us access to both a free robot advisor, a different free advisory service via telephone, and financial literacy classes.  None of these services were as well publicized as they could have been, and I mostly found out about them by accident.

#6 creditmaze

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Posted 06 September 2017 - 01:04 PM

Thank you very much for sharing. I really appreciate it.

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