Investing/Retirement

[DrDusty86]

I have a question. I am looking into EE savings bonds and also a ROTH IRA. I know the savings bonds double in value after 20 years, and the IRA I'd have to be about 65 years old or so to redeem it.I am looking to start building cushion now while I'm in my 20's. The Idea of the savings bond appears appealing to me. The first one could be redeemed when I'm 45, so not to old. The Roth seems that it would become "my generations SSI" in a sense. I'm going to have my Doctorate Degree in Physical Therapy in 3.5 years. Then I'm looking at buying 100 acres or so and building a house and shop. Then I will look into starting a family.. I want to retire early so that I can be their for my kids and wife.
With that said what would be the better option?
Thanks,
Dusty

 

[Drew99GT]

http://www.savingsbonds.com/rates.cfm

You're young; I'd get bit more risky for long term retirement growth. You don't have to be a day trader or anything, but when you get a good 401K it might open up the opportunity to get into some of the best mutual funds out there, ones normally associated with $100,000 initial investments. Since you'll be working in the medical industry, most employers will have top notch retirement benefits.

 

[dwendt44]

You do not HAVE to be 65 to draw on a Roth IRA.
Me thinks you can draw anytime from a Roth.

Even a regular IRA can draw at 59 1/2 (IIRC).

http://www.rothirarules.net/

 

[eljefino]

Invest in yourself! I'd lock in lower land/mortgage prices and hurry to get that squared away first. You will manage your own property and affairs better than some jerk in a suit manipulating paper to make a company look profitable for another 90 days.

You don't say how you're paying for school, but you have to ask yourself if investments are looking better than your student loan interest. (Sometimes loans are ridiculously cheap.)

I have a sneaky hunch IRAs may be tapped next as a form of economic stimulus, letting us withdraw early without tax penalty. You can usually borrow against them too.

 

[BeanCounter]

Roth IRA through a qualified group, handled on your own if possible/feasible.

 

[joel95ex]

Originally Posted By: BeanCounter
Roth IRA through a qualified group, handled on your own if possible/feasible.


yes, but don't do retirement until everything but a house is paid off---including student loans... even if your student loans are at 2%, that is 2% down the tubes/wasted. you are so young that you have a chance to do it right. I highly recommmend you look into dave ramsey's teachings. it is very simple, but will lessen the stress that debt can bring to your life. basically get a starter emergency fund, pay off everything smallest to largest except house, finish 3-6 month emergency funds, start 15% towards Roth IRA or Roth 401k (roth is after tax, then pay off house

 

[Shannow]

I don't trust retirement schemes at all...the rules change so regularly that over the next quarter century (for me), I've no idea what the rules will be etc.

My Paternal grandfather paid voluntarily into a retirement fund, which was taken over by the Govt for a guaranteed pension for all, which they tried to diddle him out of...

If we all save dilligently to keep ourselves in retirement, we will be tying up so much cash, and requiring a greater than CPI return, that funds will be betting on flies crawling up walls to get a step ahead...then there's one winner, and one loser per transaction.

In such an environment, the bets have to be bigger and better every time, to cover the potential losses,and then when the bubble gets too big, it has to be flushed, to get back to square.

It makes the "Ponzi" scheme of paying benefits out of current accounts, with today's savings inflow seem even reasonable if you think about it for long enough.

But we hate to see our cash today, funding someone else' idleness, when our parents paid for 18-20 years of zero productivity, and the roads/bridges/powerstations were built using someone else' money years ago.

 

[Spector]

Money in a Roth has to be there 5 years for earnings to be tax free and one has to be 59 1/2 to get earnings out tax free.

 

[BeanCounter]

Originally Posted By: joel95ex
Originally Posted By: BeanCounter
Roth IRA through a qualified group, handled on your own if possible/feasible.


yes, but don't do retirement until everything but a house is paid off---including student loans... even if your student loans are at 2%, that is 2% down the tubes/wasted. you are so young that you have a chance to do it right. I highly recommmend you look into dave ramsey's teachings. it is very simple, but will lessen the stress that debt can bring to your life. basically get a starter emergency fund, pay off everything smallest to largest except house, finish 3-6 month emergency funds, start 15% towards Roth IRA or Roth 401k (roth is after tax, then pay off house


It all comes down to time value of money (tvm), very generically. If your student loans have an interest rate higher than what you could expect to grow your investments, in general, you'd be right. But if you can reasonable expect to see a higher return on your investment versus the cost of student loan interest, I wouldn't agree.

On top of that, student loan interest is an above-the-line deduction that reduces AGI. Likely not a huge difference, but worth mentioning.

For the record, I'm not a proponent of debt or anything to that extent. But manageable debt (that gets tax breaks to boot) is not always a 100% negative, under conditions, if you can be disciplined and control your finances.