Most of my money goes into a high yield savings account to survive with no income for a while (trying to get 18 months in there!). I do fund an IRA, my employer 401k (to get the most matching), and two Roth IRAs though. The investments in those are relatively conservative, I consider investing in my own products to be my "high risk, high gain" strategy.
Roth IRAs are great, you can take the principle out at any time (since it's post tax money). It's only gains that are off limits until retirement. Not only that, you can roll normal IRAs and 401Ks into a Roth IRA and get that money out after something like 3 years. It's thing #1 I'm going to do when I quit receiving a paycheck and have a year of very low income to report. I largely consider the Roth IRA principle as part of my savings fund.
If I started working harder to manage those investments, I'd head over to the Bogleheads forum and spend a week or two reading. For now, I have a friend who knows his shit that just tells me where to stick the money to keep it reasonably safe. It's mostly no-load mutual funds with a pretty big chunk of bonds in them.
I do the same with my Roth principle. But it's worth mentioning that, when you roll a 401k into a Roth you owe taxes on it. And if you have to take a portion of that 401k principle to pay the taxes, you'd almost certainly be better off keeping it int he 401k.
Also, if you imagine you'll have the same tax rate now as you will at retirement, there's no advantage to a roth. Whether you prepay taxes or defer them, it's all the same, the cash available at retirement will be the same.
The real advantage to a Roth is if you think you're paying a lower tax rate now than you will be when you retire.
Oh right. When you rollover, you pay normal income taxes on it. My big point was that if I have a year where I have minimal income, normal income taxes are going to be so low that rolling it over makes a ton of sense. I doubt I'll ever have a lower tax rate than in a year with very little income.
>I'd head over to the Bogleheads forum and spend a week or two reading.
The bogleheads forum is a fantastic resource with many published authors and other smart folks. I have been an avid reader (and occasional participant) for over 2 years.
It's a quick read and probably tells you a lot of what you already know, but it's well written and explains the basics of the various investment vehicles well.
This is great advice. You can read a ton about passive investing over at Bogleheads, how to maximize the returns on your index funds, the proper bond allocations, etc.
It's actually quite amazing to me that a lot of geeks who would spend literally hundreds of hours researching esoteric technical knowledge on the Internet, won't spend at least a few hours researching how to setup their retirement accounts. With life expectancies on the increase, we can reasonably expect to live 1/3rd or more of our life in retirement. Wouldn't you want to make sure you had enough money to do this?
Also, for someone with an entrepreneurial streak, wouldn't it be nice to "retire early" in your 50s and have the luxury of a steady income while starting a new business? This is ideal - imagine being a founder and not having to worry about paying for food or housing.
Roth IRAs are great, you can take the principle out at any time (since it's post tax money). It's only gains that are off limits until retirement. Not only that, you can roll normal IRAs and 401Ks into a Roth IRA and get that money out after something like 3 years. It's thing #1 I'm going to do when I quit receiving a paycheck and have a year of very low income to report. I largely consider the Roth IRA principle as part of my savings fund.
If I started working harder to manage those investments, I'd head over to the Bogleheads forum and spend a week or two reading. For now, I have a friend who knows his shit that just tells me where to stick the money to keep it reasonably safe. It's mostly no-load mutual funds with a pretty big chunk of bonds in them.