My husband got a raise

Anonymous 1

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and we would like to save some of the extra money. We have 401k and a regular checking and savings but that's about it. We have never really known what else to do with any extra money we have because it doesn't happen often. But now with this raise, we could maybe try to save in other ways. What would you suggest doing?
Anonymous 2

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IRA
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MonarchMom
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If you qualify for a Roth IRA that is the next step I would take. Since it is "after tax" money, you can withdraw the contributions you make without penalty if you need access to the money in the future. So it can serve as both a retirement plan (all growth is tax-free after 5 years) and an emergency fund.

A low-fee company like Fidelity, Vanguard or Ameriprise is a good place to open the account.

https://www.fidelity.com/retirement-ira ... lsrc=3p.ds
Anonymous 1

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Thanks! Have you ever heard of Ally Bank? I guess their interest rate is pretty high for a savings acct. I had a mortgage broker tell me that he has used Ally for 10 years now and if you put 25K in it, you get about 850 bucks in interest each year. Would I make more than that with an IRA?
MonarchMom wrote: Sun Mar 19, 2023 5:15 pm If you qualify for a Roth IRA that is the next step I would take. Since it is "after tax" money, you can withdraw the contributions you make without penalty if you need access to the money in the future. So it can serve as both a retirement plan (all growth is tax-free after 5 years) and an emergency fund.

A low-fee company like Fidelity, Vanguard or Ameriprise is a good place to open the account.

https://www.fidelity.com/retirement-ira ... lsrc=3p.ds
Deleted User 1511

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Anonymous 1 wrote: Sun Mar 19, 2023 5:55 pm Thanks! Have you ever heard of Ally Bank? I guess their interest rate is pretty high for a savings acct. I had a mortgage broker tell me that he has used Ally for 10 years now and if you put 25K in it, you get about 850 bucks in interest each year. Would I make more than that with an IRA?
MonarchMom wrote: Sun Mar 19, 2023 5:15 pm If you qualify for a Roth IRA that is the next step I would take. Since it is "after tax" money, you can withdraw the contributions you make without penalty if you need access to the money in the future. So it can serve as both a retirement plan (all growth is tax-free after 5 years) and an emergency fund.

A low-fee company like Fidelity, Vanguard or Ameriprise is a good place to open the account.

https://www.fidelity.com/retirement-ira ... lsrc=3p.ds
I'd shop around a little. The interest rate that you quoted for Ally is about 3.4%. A money market account with Edward Jones (that's where I am) is 4%. I've worked with Fidelity, Ameriprise, and Edward Jones and they have all been good. It makes a huge difference in how to connect to the advisor and I connected best with our local Edward Jones advisor. Money isn't going to go anywhere so you have time to shop around and find someone who understands your needs and wants and also with whom you connect.

ETA: as MonarchMom suggested, a Roth IRA is a great investment (right now earning 9-10%) but you are limited in the amount you can put into one and while you can withdraw contributions without penalty, you can't withdraw earnings until you are 59 1/2. It's a great option if you are hoping to save for retirement but not such a great option if you are hoping to save for a new roof, for example.
Anonymous 1

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Great info! Thank you!!!
WellPreserved wrote: Sun Mar 19, 2023 6:19 pm
Anonymous 1 wrote: Sun Mar 19, 2023 5:55 pm Thanks! Have you ever heard of Ally Bank? I guess their interest rate is pretty high for a savings acct. I had a mortgage broker tell me that he has used Ally for 10 years now and if you put 25K in it, you get about 850 bucks in interest each year. Would I make more than that with an IRA?
MonarchMom wrote: Sun Mar 19, 2023 5:15 pm If you qualify for a Roth IRA that is the next step I would take. Since it is "after tax" money, you can withdraw the contributions you make without penalty if you need access to the money in the future. So it can serve as both a retirement plan (all growth is tax-free after 5 years) and an emergency fund.

A low-fee company like Fidelity, Vanguard or Ameriprise is a good place to open the account.

https://www.fidelity.com/retirement-ira ... lsrc=3p.ds
I'd shop around a little. The interest rate that you quoted for Ally is about 3.4%. A money market account with Edward Jones (that's where I am) is 4%. I've worked with Fidelity, Ameriprise, and Edward Jones and they have all been good. It makes a huge difference in how to connect to the advisor and I connected best with our local Edward Jones advisor. Money isn't going to go anywhere so you have time to shop around and find someone who understands your needs and wants and also with whom you connect.

ETA: as MonarchMom suggested, a Roth IRA is a great investment (right now earning 9-10%) but you are limited in the amount you can put into one and while you can withdraw contributions without penalty, you can't withdraw earnings until you are 59 1/2. It's a great option if you are hoping to save for retirement but not such a great option if you are hoping to save for a new roof, for example.
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MonarchMom
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Anonymous 1 wrote: Sun Mar 19, 2023 5:55 pm Thanks! Have you ever heard of Ally Bank? I guess their interest rate is pretty high for a savings acct. I had a mortgage broker tell me that he has used Ally for 10 years now and if you put 25K in it, you get about 850 bucks in interest each year. Would I make more than that with an IRA?
MonarchMom wrote: Sun Mar 19, 2023 5:15 pm If you qualify for a Roth IRA that is the next step I would take. Since it is "after tax" money, you can withdraw the contributions you make without penalty if you need access to the money in the future. So it can serve as both a retirement plan (all growth is tax-free after 5 years) and an emergency fund.

A low-fee company like Fidelity, Vanguard or Ameriprise is a good place to open the account.

https://www.fidelity.com/retirement-ira ... lsrc=3p.ds
An IRA is just a type of account designation for tax purposes. You set it up at a bank or brokerage company then you fund the IRA with your choice or investments. Inside the IRA account you can have a savings account, CDs, index funds, stocks, etc. If you open an IRA with Vanguard or Fidelity, you will be able to invest in their low-fee index funds and the shares will be held in the IRA account. They tend to grow faster than other types of accounts because you are not taxed on the earnings (never for the Roth, and not until you withdraw the money for a Traditional IRA.) So every year all the earnings can be reinvested and you get compound growth - no money being taken out for taxes.

Do a little reading, or take a beginners investment course from your library or adult education programs. The "courses"offered by individual brokers tend to be sales pitches to sell you expensive life insurance products or high-fee funds.
Anonymous 1

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Thank you! All of this seems so intimidating! I know nothing about it at all! And we don't have people we can ask about it.
MonarchMom wrote: Sun Mar 19, 2023 6:54 pm
Anonymous 1 wrote: Sun Mar 19, 2023 5:55 pm Thanks! Have you ever heard of Ally Bank? I guess their interest rate is pretty high for a savings acct. I had a mortgage broker tell me that he has used Ally for 10 years now and if you put 25K in it, you get about 850 bucks in interest each year. Would I make more than that with an IRA?
MonarchMom wrote: Sun Mar 19, 2023 5:15 pm If you qualify for a Roth IRA that is the next step I would take. Since it is "after tax" money, you can withdraw the contributions you make without penalty if you need access to the money in the future. So it can serve as both a retirement plan (all growth is tax-free after 5 years) and an emergency fund.

A low-fee company like Fidelity, Vanguard or Ameriprise is a good place to open the account.

https://www.fidelity.com/retirement-ira ... lsrc=3p.ds
An IRA is just a type of account designation for tax purposes. You set it up at a bank or brokerage company then you fund the IRA with your choice or investments. Inside the IRA account you can have a savings account, CDs, index funds, stocks, etc. If you open an IRA with Vanguard or Fidelity, you will be able to invest in their low-fee index funds and the shares will be held in the IRA account. They tend to grow faster than other types of accounts because you are not taxed on the earnings (never for the Roth, and not until you withdraw the money for a Traditional IRA.) So every year all the earnings can be reinvested and you get compound growth - no money being taken out for taxes.

Do a little reading, or take a beginners investment course from your library or adult education programs. The "courses"offered by individual brokers tend to be sales pitches to sell you expensive life insurance products or high-fee funds.
Anonymous 3

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I just asked this of my brother who is a CPA and financial advisor. He suggested something like a Vanguard S&P index fund. He advised against an IRA but I can't remember or understand why, especially with the explanations in the comments above. We followed his advice and invested in a municipal bond fund and we are pretty happy with the performance. Just keep in mind that it is a long term investment with tax liabilities if you withdraw before 1 year. You shouldn't expect a large payout any time soon with a municipal bond or a munis bond fund.

BTW, we also have Ally bank and we're pretty happy with them. We just use them for our regular savings and money market, no major investing there. I don't know what our current APY is, I would have to look it up- but I know I got more with Goldman Sachs.
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Conweis
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You could try an IUL, Index Universail Life insurance. From what I understand it's like being your own bank.
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