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Sep 25, 2006 | 08:32 PM

shimbo519

Thread Starter

USMC Butterbars

Joined: Aug 2001

Posts: 1,796

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From: VA

Advice needed

Background info: I am single. My annual salary is around $25k after taxes. I have about $10k saved up as of now in a savings account. I recently took out a loan for $25k at 2%(I know, unheard of...but it's for newly commissioned officers) and plan on putting that into a savings account at 5.1% as well. I do not have any 401k/IRA accounts setup yet. I have no other debt besides the aforementioned personal loan I recently took.

So my question is, how should I distribute/contribute to a retirement plan? Is a savings account sufficient or should I look into mutual funds as well? I am conservative when it comes to money so please keep that in mind. Thanks!

S/F

Cliffnotes:
Salary: $25k after taxes
Current Savings: $35k
Monthly debt payments: $700
Monthly expenses: $200
IRA/401k: none

Sep 25, 2006 | 08:43 PM

Fibonacci

I feel the need...

Joined: May 2004

Posts: 14,957

Likes: 515

From: Motown

Borrowed at two percent? For how long? That's a pretty good arbitrage play if you can reinvest it at a higher rate, which is quite easy to do right now.

Start with a Roth IRA, that's a no brainer.

As for the 401(k), you have the Gov't equivalent to choose from, check with Ken.

Sep 25, 2006 | 08:46 PM

GIBSON6594

My Garage

Joined: Nov 2004

Posts: 13,386

Likes: 11

From: NY

Borrow more money

Sep 25, 2006 | 08:50 PM

Fibonacci

I feel the need...

Joined: May 2004

Posts: 14,957

Likes: 515

From: Motown

Also, check out the personal finance section here for starters...

http://money.cnn.com/pf/index.html

Millionaires in the Making section should give you some inspiration, good luck young Jedi.

Sep 25, 2006 | 09:08 PM

Fibonacci

I feel the need...

Joined: May 2004

Posts: 14,957

Likes: 515

From: Motown

Looks like you'll want to inquire about a Thrift Savings Plan...

Quote:

Thift Savings Plan, a benefit offered to government employees and military members. The plan works like a simplified, government run 401(k) that allows members to divert portions of their income into six types of mutual funds.

http://money.cnn.com/2006/05/09/pf/m...ion=2006051010

Sep 27, 2006 | 09:18 PM

03silvertypeS

Drifting

Joined: Apr 2005

Posts: 2,612

Likes: 7

From: Pittsburgh, PA

i agree with Fibonacci on this one, I'd start off with $4k in a Roth IRA for this year and on January 1st, put in another $4k. This will maximize the amount you can put in for both years. You're only allowed to contribute $4,000 each year. As for the rest, it depends on your liquidity needs. If you don't need the money anytime soon, you can keep a small amount in your savings, and get some Treasury Bills or bonds, and invest the majority that's left into mutual funds(unless you know the stock market). This will generate higher amounts of interest than just leaving it in a savings account, but it's better for long-term. I wouldn't recommend mutual funds if you're only looking to invest for a couple years because you may end up losing out. If you're looking for short-term investments, you're looking at more risk, but you could end up making a lot more money.