I plan on maxing out my Roth IRA throughout 2017. There are two methods that I am considering and I would appreciate some advice!
Option 1. Contribute $250 per pay period (semi-monthly) to my Roth IRA. I would most likely invest this in FSTVX, but might purchase $2.5k of Fidelity's bond index fund this year. Currently I have about $10k in FSTMX, so I am close to qualifying for FSTVX. I am 24, so I'm taking a more aggressive approach but I will soon want to purchase the bond index fund.
Option 2. Contribute $250 per pay period to my employer's stock purchase plan. $250 is the maximum that they will allow and they match 15% of my contributions. This is an extra $900/year. If I do this, I would sell $5500 near the end of the year and transfer it to my IRA. The pro: immediate 15% return. The cons: $25 transaction fee when I decide to sell (which is why I would only sell once, when I have the $5500), short term capital gains tax, the $900 employer contribution is also taxed, and I am investing in one company (this is a Fortune 500 company) as opposed to an index fund.
Unfortunately, I am pretty set on only contributing $250 per paycheck. I don't have the flexibility to contribute to my IRA and also do the stock purchase plan on the side.
I also have about $4k invested in a brokerage account that was gifted to me. I am going to hold onto this for now because I am still building a 6 month emergency fund. Right now I have about 4 months expenses saved, so I am holding onto the $4k in case something happens where I will need more than 4 months expenses. I anticipate that I'll reach the 6 month mark at the end of March. I might also contribute the money in the brokerage account towards an engagement ring later in the year. Sorry for the wall of text, but I'm trying to provide as much relevant information as possible.
Do you guys have any input? Is there a different method you would go with?
Any advice and feedback is appreciated, thanks!
Submitted January 03, 2017 at 11:28AM by stlmad http://ift.tt/2iEDYnX
