Feb 5, 2009

Roth IRA: Just Maxed Out 2008, down $5000

Today, I put the last $300 into my Roth IRA for 2008. It feels rewarding to know that I'm saving for my future, yet the $5000 in losses to my Vanguard Portfolio due to current economic conditions isn't exactly a fun "reward" to look at in my accounts.

Still, I'm investing with the hope... and faith... that the economy will recover again. I think it will, eventually, but it's going to take a while. Had I followed my faith a year ago that the stock market was going to keep tanking, I would have possibly shorted some stocks and cold have been much better off now... but I don't have time, or the heart, to deal with such "high risk" behavior. Instead, I put my money in the stock market, knowing it's going to tank now, hoping it will rise in the future.

The question I have now is when do I invest in my Roth for 2009? Usually I put a large chunk of money in up front (money left over from taxes). By "usually" I mean over the last two years, since that's how long the account has been open. I like to just get it out-of-sight, out-of-mind before I start thinking of myself as wealthy enough for luxuries. The stock market seems pretty bad right now, so I'm not too worried about adding another few thousand once I get my tax return back. Still, this all begs the question whether I should spread out my investments ($440 a month) or put a bunch in up front and finish up over the later half of the year (like I've been doing.) Dollar cost averaging is always the recommended way to go... but, eh, when the market is this down, maybe it doesn't matter as much?

Also, as far as retirement savings go, I decided to do the HSA for my healthcare. In addition to my company putting $100 in the account per month, I'll be putting $100 in. So that'll be $2400/year for healthcare *or* retirement. I'm just worried my frugal save-for-retirement self will avoid doctors in order to save for my retirement, and I'll end up killing myself slowly in the meantime. (Not that I ever go to doctors, even when I have full insurance, I'm too lazy and busy). In any case, the savings rate for the HSA is so sucky - 2.1 or something - and w/ the taxes in California taken out of that it isn't a huge savings. But I'm going to look at it as a traditional IRA that's being overtaxed by my bankrupt state. One that I can dip into if I need to go to the doctor for antibiotics every once in a while.

The HSA does have the option to invest with Ameritrade, so I'm probably going to look into setting that up soon. I won't put all the money in stocks, but I'd like to diversify my retirement portfolio outside of Vanguard and I do want to get some Gold/Silver ETFs in it... since they don't get taxed at the ridiculous collection tax rate if they're in an IRA. Well, I don't know how that works in an HSA... esp since it doesn't get taxed federally but it does get taxed in CA. Hmm.


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