How does a Roth IRA work?

[Dreamchaser]

@Black Panther
@Russ
@the cac mamba
@Insensitive

@any body else that has advice

I helped my mom open up a Roth IRA with fidelity. She maxed out 2020 & 2021 so there is $14,000 in there. she's retiring in 6 years so she wants to do a low risk strategy.

I chose the following funds:

FXAIX: FIDELITY 500 INDEX FUND
FSPGX: FIDELITY LARGE CAP GROWTH INDEX FUND
FNCMX: FIDELITY NASDAQ COMPOSITE INDEX FUND
FSPTX: SELECT TECHNOLOGY PORTFOLIO

They don't have any fees and researching this board and others they seem like solid picks.

My question is how much money do i allocate for each fund? Should the fidelity 500 be the one that has the most money on it? How would ya split it up?

How you allocation should depend on her overall strategy, if shes doesn't have any other type of retirement funds then I would do something along the lines of 60% equities and 40% bonds. I would put that 60% in Fidelity 500 Index Fund. You should look at IRA contributions $6000 is deductible from her taxes depending on her income although the money gets taxed later plus she could tax a tax credit for making the contribution.

 

[desjardins]

This is my allocation at fidelity for my taxable account, OP:
FZROX - total market index fund - 50%
FSRNX - real estate index fund - 10%
FZILX - Intl Index fund - 10%
FXNAX - U.S Bond Index fund - 10%
FZIPX - Extended Market - 5%
FMDGX - Mid Cap Growth - 5%
FECGX - Small Cap Growth - 5%
FLCOX - Large Cap Value - 5%

do you own research though.
one thing about fidelity is their holds on cash transfers seems excessive. that may have been what was up with your money after you deposited it.

 

[Ozymandeas]

Just realized I was pouring jelly on myself by not maxing out my 401K. Because my job matches up to 5%, I would have to do 100% on my own (to account for the free money) and then another 12% (what my 401K has earned so far in 12 months) to equal up. I got a good chunk in there just from lazily investing but, I didn't realize how much I was playing myself by not taking it serious until today. Bout to make that my primary focus and have my stock portfolio just be for fun.

 

[Xyrax]

Just realized I was pouring jelly on myself by not maxing out my 401K. Because my job matches up to 5%, I would have to do 100% on my own (to account for the free money) and then another 12% (what my 401K has earned so far in 12 months) to equal up. I got a good chunk in there just from lazily investing but, I didn't realize how much I was playing myself by not taking it serious until today. Bout to make that my primary focus and have my stock portfolio just be for fun.

Ahh damn, well at least you got it now. Yeah the 401k is cheat code tier, you gotta max that. Pre-tax money plus a free 100% return right off the bat is ridic. The compounding on that is so fast and so extreme. Just 3 years of it plus maxing your IRA will have you looking at your net worth like

It should be criminal that they didn't teach me that shyt in school man. I know its a corny and common thing to say. But its so fukking true. I was fukking around in mid 20's after Uni. If I could get those 3-5 years back ... Just wow.

 

[Shadow]

Bumping this thread because I see no negatives in Roth IRAs. This is one of the smartest things a person could do and I wish they taught us about this stuff in school. I could have been putting money in there and having my folks contribute to their own.
You live and you learn brehs.

 

[The_Hillsta]

 

[Koapa]

I have an Roth IRA 401k. Let the govt get their cut first. My employer match 100% up to 6%. I plan on maxing out on my next pay raise.

I also buy at least 4 shares of JEPI ETF per month. Currently have 330 shares. Monthly dividends baby. I considered ETF my second savings account.

 

[Da Jungles]

I have an Roth IRA 401k. Let the govt get their cut first. My employer match 100% up to 6%. I plan on maxing out on my next pay raise.

I also buy at least 4 shares of JEPI ETF per month. Currently have 330 shares. Monthly dividends baby. I considered ETF my second savings account.

About $130/month?

 

[The_Hillsta]

I have an Roth IRA 401k. Let the govt get their cut first. My employer match 100% up to 6%. I plan on maxing out on my next pay raise.

I also buy at least 4 shares of JEPI ETF per month. Currently have 330 shares. Monthly dividends baby. I considered ETF my second savings account.

Jepi, Divo, SCHD, O....All in the Roth

 

[Koapa]

About $130/month?

Yep. I basically do DRIP with my dividends.

 

[Koapa]

Jepi, Divo, SCHD, O....All in the Roth

Oh you winning.