Newbie in investment

[Pebbles555]

Hello to all. I am so glad I came into this forum.

I read tons of forum and article. Everything is new to me. I want to start investing in vanguard but I have limited cash like 3000$. I would like to ask if I should open the Roth IRA or brokage account or traditional Ira?

I have a maximized 403b which is fully maxed by my employer. I have my hsa also. I want to expand my investment and want to start even though I will start in a small amount of money. After that I will plan to put 500 dollars every month on that account.

Can anyone please suggest where to start and what fund to invest??? I am eyeing the VTSAX for Roth IRA.

Really appreciate your feedback and thank you.

By the way, currently 39 years old and planning to retire 10 years from now....hoping....

Thanks

[prognastat]

Hi, welcome to the forums.

It depends a lot on how much income you make.

If you are eligible for the deduction with a Traditional IRA that is an option, otherwise I would probably see if you are eligible to make Roth IRA contributions instead up to the limit. If you aren't eligible for either then I'd go for a regular brokerage account.

If I recall correctly though you aren't eligible for VTSAX until you have 10k in the account.

[gocurrycracker]

The VTSAX minimum was reduced to 3k a while back. If less than that, you can buy the ETF (ticker symbol: VTI)

Really, there is nothing you can do wrong here. Traditional, Roth, Brokerage, whatever, the most important thing is you are saving $. The boring details are just related to taxes.

Easy approach: 403b contributions Traditional, IRA as Roth, the rest in brokerage

If you want to dig deeper: compare your current marginal tax rate to your expected tax rate in retirement. If now > retirement, then Traditional, else Roth. It depends on income.

[Pebbles555]

Thanks all for the reply. I started already in vanguard and both 3k shares of vtsax. Planning to add more money every month on it. Thanks again and got so excited with this FI journey. Also, maximize already my 403b and planning to open an account for Roth IRA.

[prognastat]

Congrats on getting started, the first steps are always the hardest one. Now that you have started the inertia it'll only get easier the more you add.

[Pebbles555]

Do you invest bonds in your brokerage (taxable) account? 

The VTSAX minimum was reduced to 3k a while back. If less than that, you can buy the ETF (ticker symbol: VTI)

Really, there is nothing you can do wrong here. Traditional, Roth, Brokerage, whatever, the most important thing is you are saving $. The boring details are just related to taxes.

Easy approach: 403b contributions Traditional, IRA as Roth, the rest in brokerage

If you want to dig deeper: compare your current marginal tax rate to your expected tax rate in retirement. If now > retirement, then Traditional, else Roth. It depends on income.

[gocurrycracker]

Do you invest bonds in your brokerage (taxable) account? 

The VTSAX minimum was reduced to 3k a while back. If less than that, you can buy the ETF (ticker symbol: VTI)

Really, there is nothing you can do wrong here. Traditional, Roth, Brokerage, whatever, the most important thing is you are saving $. The boring details are just related to taxes.

Easy approach: 403b contributions Traditional, IRA as Roth, the rest in brokerage

If you want to dig deeper: compare your current marginal tax rate to your expected tax rate in retirement. If now > retirement, then Traditional, else Roth. It depends on income.

I hold some bonds in my taxable account, yes. Interest is taxed at your marginal rate.

Ibonds can be held tax-deferred, and municipal bonds are not taxable at the Federal level (maybe at State, and definitely for ACA subsidy calculations.)

[Pebbles555]

Thank you Jeremy for the reply. Really appreciate it. I am planning to buy VBTLX and since I don?t have tIRA and ROTH IRA at vanguard, I will just buy the VBTLX and put it in taxable account. Bonds until now, i still have to learn from it and even the TAXATION. Is it a good idea???
Thank you..

Do you invest bonds in your brokerage (taxable) account? 

The VTSAX minimum was reduced to 3k a while back. If less than that, you can buy the ETF (ticker symbol: VTI)

Really, there is nothing you can do wrong here. Traditional, Roth, Brokerage, whatever, the most important thing is you are saving $. The boring details are just related to taxes.

Easy approach: 403b contributions Traditional, IRA as Roth, the rest in brokerage

If you want to dig deeper: compare your current marginal tax rate to your expected tax rate in retirement. If now > retirement, then Traditional, else Roth. It depends on income.

I hold some bonds in my taxable account, yes. Interest is taxed at your marginal rate.

Ibonds can be held tax-deferred, and municipal bonds are not taxable at the Federal level (maybe at State, and definitely for ACA subsidy calculations.)

[gocurrycracker]

You can purchase the ETF equivalents if you have your IRAs at another brokerage.

Is it a good idea isn't really a question that can be answered.

If you've decided you want to hold bonds, and you can't hold them in your IRA, then you hold them in your taxable account as it is the only other option.

[Pebbles555]

Thank you for taking time to reply. I already know what I want to buy but somehow got confused which bucket to use especially when buying bonds. Thanks again...

You can purchase the ETF equivalents if you have your IRAs at another brokerage.

Is it a good idea isn't really a question that can be answered.

If you've decided you want to hold bonds, and you can't hold them in your IRA, then you hold them in your taxable account as it is the only other option.

[gocurrycracker]

this might help
https://www.bogleheads.org/wiki/Tax-efficient_fund_placement#Tax_efficiency_of_various_asset_classes

[Pebbles555]

Thank you again Jeremy and really appreciate it :-)

this might help
https://www.bogleheads.org/wiki/Tax-efficient_fund_placement#Tax_efficiency_of_various_asset_classes