Wednesday, January 11, 2012

Going to the Next Level

On Friday I met with my financial adviser to finish switching over my 403(b) to him, open my Roth IRA, and start being more aggressive with my savings. It ended up being a two and a half hour meeting, and I learned a lot.

The Roth is pretty simple. I'm doing a monthly contribution in order to max it out for 2012. I'm having it deducted from my checking every month, so it will happen automatically and I don't have to think about it too much. However, since I asked a lot of questions and seemed genuinely interested in how it worked, Steve (financial adviser) helped me plan out four different types of investments for my Roth. Each investment has lots and lots of stocks in it, but I did three international investments and one domestic. There is a range of risk, but overall it's pretty aggressive. I feel good about not only starting a Roth, but learning more and having a say in where my money is going.

We also set up investments in California Municipal Bonds to try to earn more interest on the money that's sitting in my Emergency Fund. I kept about one fourth of my E-fund money in my credit union account, so that it's easily accessible. The rest (and $500 from here on out) will be invested in bonds. On average these are earning about 6% and the growth is tax free. :) The money is completely liquid; I can access it at any time. But, the longer it stays in the account the more I can earn in interest, so I want to leave it alone as much as possible. I am also thinking that this will be my house down payment fund, since the interest is so good. I can always deposit more or less, but I like that it's set up with an automatic amount. Any extra savings can go in my CU emergency fund, which will also help me grow that savings as well. There is a small amount of risk in the investments, but bonds are very stable and Steve was able to show me data on how the accounts I'm in have performed, so I feel good about it.

I'm excited about these choices for a few reasons. One, it will be awesome to get more interest on my savings rather than just letting it sit in my CU account. Two, I feel like I'm transitioning to a place where rather than just keeping money for an emergency, I (might) actually make some money by investing wisely. I understand what I'm doing, and while I'm not blind to risk, I feel like I'm growing in my financial skill and understanding. If I can keep going with my Roth and 403(b) I should be in a great place to retire (I also have a pension). And, if my savings can earn the interest promised, I could be on the road to home ownership in the next couple of years.

I guess  what I'm trying to articulate is that I'm not the person who had a bunch of debt and no real plan on how to handle it. And I'm not even the person who just paid off debt and managed to save a little each month. I'm a person who is getting good at finances. Of course I  have more to learn (a lot more), but I left the meeting on Friday on a high, knowing that I was taking power over my financial future and present. It felt good.

1 comment:

  1. Well done, you are really striving ahead. I think using the emergency fund in that way is a positive step. My husband and I just earnt $24.36 in interest on our house deposit fund, I certainly got a "financial high" seeing that. Currently my retirement savings are in an agressive fund and this will be down scaled to a more conservative fund once I get a bit older.