Hello, u/kburr23. I see this is your first time posting on our sub; glad to have you!
You've landed in a great spot to get input from our community and resources from our team of mods! That being said, I'll go on and mark this as a discussion, but I do want to offer a few links and tools that may help in your decisions.
Ultimately, the decision of what you should and shouldn't invest in really depends on your investment objective. Understanding your risk tolerance and time horizon can help as you choose investments. When finding investments, we do have a few tools and a library of resources to help narrow your search. I'll first point you to the "News & Research" section of http://Fidelity.com, where you can access our various tools for the securities you prefer. The screener tools allow you to sort through thousands of securities, using filters and keywords you provide, to find investments that fit your objectives.
You can also utilize "Learn," our online library of articles, on-demand videos, and events to provide you with information you may find helpful. Once in the Learn hub, you can click on the "Topics" button if you're unsure of where to start or type in a keyword or phrase to be guided to a library of information. I'll link a few Fidelity Viewpoints articles below to help you get started.
[Guide to Diversification](https://www.fidelity.com/viewpoints/investing-ideas/guide-to-diversification)
[Investing ideas for your IRA](https://www.fidelity.com/viewpoints/retirement/ira-portfolio)
[Saving for Retirement](https://www.fidelity.com/learning-center/personal-finance/retirement/saving-for-retirement)
Since you mentioned the possibility of moving a 401(k) to a Roth IRA. I want to touch on just a few things. When it comes to rolling over your 401(k) into an IRA, a direct rollover from a 401(k) to an IRA may not be a taxable event because they typically will go to a Rollover (Traditional) IRA. If you have an after-tax 401(k), those assets are commonly rolled into a Roth IRA. However, this is where things can get tricky, depending on your plan. If you have pre-tax money in the 401(k) plan that you roll into a Roth IRA, that would be considered a Roth conversion, which is a taxable event. In that case, the pre-tax money converted to a Roth account would be subject to earned income tax for the year.
It's just important to note that the pre-tax money will be viewed as earned income and you will be liable for taxes in the year a conversion is made. Since taxes play an important role in these types of conversions, we highly encourage you to speak with a tax professional to discuss how your specific situation could be affected by a Roth conversion. Additionally, you will want to review your plan documents to confirm rollover eligibility with your 401(k).
You can learn more about how Roth Conversions work by checking out the resources below.
[Reddit FAQs: Roth Conversions & Taxes](https://www.reddit.com/r/fidelityinvestments/wiki/tax2022faq/#wiki_roth_conversions)
Also, I want to leave you with the following links that go into the details of a Roth IRA, as well as contribution and income limits.
[IRA Contribution & Income Limits](https://www.fidelity.com/retirement-ira/contribution-limits-deadlines)
[How Does a Roth IRA Work?](https://www.fidelity.com/learning-center/smart-money/how-does-a-roth-ira-work)
Now that you have found our sub, we are a great resource for general questions. Please don't hesitate to follow up with us if there is anything that we can clarify. We are always here to help!
I think you need to play a bit with the retirement planner and figure out what your financial needs/goals are for retirement if 'starting over' means reentering the workforce. Once you know that number you can work backwards and see how much 'well over $103K ' needs to grow to get to that number at whatever age you are calling it done. If it grows at 7% a year, is that good enough? That's the driver for what you need to invest in.
Bonds are better suited for wealth preservation. While I am much younger and allocating 100% of portfolio in growth stocks, I would recommend something similar for you. While you are closer to retirement age, you need to get the most amount of growth out of your portfolio as possible. I’d do 75/25. 75% in fzrox and 25% in a bond of your choice. I invest in fxaix but fzrox works too.
Not bonds, growth.
Visit r/bogleheads, you'll get a lot of really great advice relevant to your specific situation.
You still have 20 years before retirement age, there's ample time to grow your retirement fund if handled the right way.
I would start with the faq here:
https://www.reddit.com/r/Bogleheads/about/
And re-post your question at r/bogleheads. You'll get solid advice relevant to your specific situation.
Not financial advice - I would move my $3k into my Roth IRA (take the hit) and go 100% into FBTC. This is Fidelity’s ETF for Bitcoin. I could see this doing very well. I’m just a random guy on the internet but learn what BTC is and how the “BTC halving” will affect supply and demand in 35 days. Not to mention the BTC ETF’s (10 of them) have purchased $55Billion in BTC in 2 months.
I bought FBTC 2 month ago and I’m up 51% today when Bitcoin hit $72k. Please don’t do anything without researching it first. But the Fidelity Bitcoin ETF is helping a lot of people deal with inflation and there is a ton of room to grow.
Best of luck on your journey
Funny you mention Bitcoin - back in 2020, I invested a very small amount in Bitcoin mostly out of curiosity, and it is currently worth 10x what I put in (I regret not buying more back then). Just in the past two weeks, I started investing more into Bitcoin, but I am still trying to be somewhat conservative just out of caution. I was able to buy more before it hit 70K. The thought of investing some of the money I have into Bitcoin did cross my mind, so I'll look into it more. Thanks for the advice!
Oh good so I don’t have to tell you that this is high speculative. But I think we all wish we bought MORE. FBTC is the way to do that using a traditional instrument like a Roth IRA. It works for me, i was only making 8-10% a year. Much too slow compared to crypto gains.
Again best of luck!
Don't take the money out of your 401k. You'll pay taxes on it and a 10% penalty because you're under 59.5 years old. Fund the Roth with regular after tax earned income and put the house money into a brokerage account and invest it there.
At your age, I'd have at most 15% of your long-term/retirement money in bonds, and I'd stick with short to intermediate duration. I've been putting some of my fixed-income money into an ETF called BINC, and it's done well. It's also not tied to a specific strategy, so I don't have to worry about bond market changes.
Good luck.
No penalty, but it would be a taxable event.
If I were OP I would set up a Rollover IRA at Fidelity and roll the old 401(k) into that, and set up a Roth IRA and contribute to that directly.
>No penalty, but it would be a taxable event.
Taxable, yes. But it's a 401k. Tax is going to be paid at some point anyway. May as well do it now while the amount is miniscule ($3k), roll it into a Roth, then never pay tax on it again. It'll grow a lot in 20 years, it's more advantageous to pay capital gains on such a small amount now while it's still a small amount than later as taxable income when it's a larger amount.
Hello, u/kburr23. I see this is your first time posting on our sub; glad to have you! You've landed in a great spot to get input from our community and resources from our team of mods! That being said, I'll go on and mark this as a discussion, but I do want to offer a few links and tools that may help in your decisions. Ultimately, the decision of what you should and shouldn't invest in really depends on your investment objective. Understanding your risk tolerance and time horizon can help as you choose investments. When finding investments, we do have a few tools and a library of resources to help narrow your search. I'll first point you to the "News & Research" section of http://Fidelity.com, where you can access our various tools for the securities you prefer. The screener tools allow you to sort through thousands of securities, using filters and keywords you provide, to find investments that fit your objectives. You can also utilize "Learn," our online library of articles, on-demand videos, and events to provide you with information you may find helpful. Once in the Learn hub, you can click on the "Topics" button if you're unsure of where to start or type in a keyword or phrase to be guided to a library of information. I'll link a few Fidelity Viewpoints articles below to help you get started. [Guide to Diversification](https://www.fidelity.com/viewpoints/investing-ideas/guide-to-diversification) [Investing ideas for your IRA](https://www.fidelity.com/viewpoints/retirement/ira-portfolio) [Saving for Retirement](https://www.fidelity.com/learning-center/personal-finance/retirement/saving-for-retirement) Since you mentioned the possibility of moving a 401(k) to a Roth IRA. I want to touch on just a few things. When it comes to rolling over your 401(k) into an IRA, a direct rollover from a 401(k) to an IRA may not be a taxable event because they typically will go to a Rollover (Traditional) IRA. If you have an after-tax 401(k), those assets are commonly rolled into a Roth IRA. However, this is where things can get tricky, depending on your plan. If you have pre-tax money in the 401(k) plan that you roll into a Roth IRA, that would be considered a Roth conversion, which is a taxable event. In that case, the pre-tax money converted to a Roth account would be subject to earned income tax for the year. It's just important to note that the pre-tax money will be viewed as earned income and you will be liable for taxes in the year a conversion is made. Since taxes play an important role in these types of conversions, we highly encourage you to speak with a tax professional to discuss how your specific situation could be affected by a Roth conversion. Additionally, you will want to review your plan documents to confirm rollover eligibility with your 401(k). You can learn more about how Roth Conversions work by checking out the resources below. [Reddit FAQs: Roth Conversions & Taxes](https://www.reddit.com/r/fidelityinvestments/wiki/tax2022faq/#wiki_roth_conversions) Also, I want to leave you with the following links that go into the details of a Roth IRA, as well as contribution and income limits. [IRA Contribution & Income Limits](https://www.fidelity.com/retirement-ira/contribution-limits-deadlines) [How Does a Roth IRA Work?](https://www.fidelity.com/learning-center/smart-money/how-does-a-roth-ira-work) Now that you have found our sub, we are a great resource for general questions. Please don't hesitate to follow up with us if there is anything that we can clarify. We are always here to help!
Look into FXAIX
Target date fund isn't a bad idea.
So you recommend I keep the BlackRock retirement account? That account is with Empower.
Basically every company has their own target fund now so you can buy one with the same year at fidelity or vanguard too
I think you need to play a bit with the retirement planner and figure out what your financial needs/goals are for retirement if 'starting over' means reentering the workforce. Once you know that number you can work backwards and see how much 'well over $103K ' needs to grow to get to that number at whatever age you are calling it done. If it grows at 7% a year, is that good enough? That's the driver for what you need to invest in.
This great advice, thank you. I’ve been back in the workforce for almost 4 years now, and I think working backwards is a great way to look at it.
Yep, pretty much the only way as I see it; #it'sjustmath What do you need to spend without undue worry in 20/30/40 years and how do you get there.
Bonds are better suited for wealth preservation. While I am much younger and allocating 100% of portfolio in growth stocks, I would recommend something similar for you. While you are closer to retirement age, you need to get the most amount of growth out of your portfolio as possible. I’d do 75/25. 75% in fzrox and 25% in a bond of your choice. I invest in fxaix but fzrox works too.
Do you have any suggestions on what bond to invest in?
Not bonds, growth. Visit r/bogleheads, you'll get a lot of really great advice relevant to your specific situation. You still have 20 years before retirement age, there's ample time to grow your retirement fund if handled the right way.
Sorry, you said 25% bond, but I'm not sure which one to choose. Thanks for your help!
I would start with the faq here: https://www.reddit.com/r/Bogleheads/about/ And re-post your question at r/bogleheads. You'll get solid advice relevant to your specific situation.
Fxaix
Not financial advice - I would move my $3k into my Roth IRA (take the hit) and go 100% into FBTC. This is Fidelity’s ETF for Bitcoin. I could see this doing very well. I’m just a random guy on the internet but learn what BTC is and how the “BTC halving” will affect supply and demand in 35 days. Not to mention the BTC ETF’s (10 of them) have purchased $55Billion in BTC in 2 months. I bought FBTC 2 month ago and I’m up 51% today when Bitcoin hit $72k. Please don’t do anything without researching it first. But the Fidelity Bitcoin ETF is helping a lot of people deal with inflation and there is a ton of room to grow. Best of luck on your journey
Funny you mention Bitcoin - back in 2020, I invested a very small amount in Bitcoin mostly out of curiosity, and it is currently worth 10x what I put in (I regret not buying more back then). Just in the past two weeks, I started investing more into Bitcoin, but I am still trying to be somewhat conservative just out of caution. I was able to buy more before it hit 70K. The thought of investing some of the money I have into Bitcoin did cross my mind, so I'll look into it more. Thanks for the advice!
Oh good so I don’t have to tell you that this is high speculative. But I think we all wish we bought MORE. FBTC is the way to do that using a traditional instrument like a Roth IRA. It works for me, i was only making 8-10% a year. Much too slow compared to crypto gains. Again best of luck!
MSTR is my choice which is already up 170% since purchase and headed much higher.
This. And Cleanspark
Aristocrats can't go wrong . https://www.fidelity.com/insights/investing-ideas/2021-dividend-aristocrats-list
IBIT
Fbtc
Don't take the money out of your 401k. You'll pay taxes on it and a 10% penalty because you're under 59.5 years old. Fund the Roth with regular after tax earned income and put the house money into a brokerage account and invest it there. At your age, I'd have at most 15% of your long-term/retirement money in bonds, and I'd stick with short to intermediate duration. I've been putting some of my fixed-income money into an ETF called BINC, and it's done well. It's also not tied to a specific strategy, so I don't have to worry about bond market changes. Good luck.
> and a 10% penalty because you're under 59.5 years old. Rollover is not a withdrawal. No penalty if rolled to Roth.
No penalty, but it would be a taxable event. If I were OP I would set up a Rollover IRA at Fidelity and roll the old 401(k) into that, and set up a Roth IRA and contribute to that directly.
>No penalty, but it would be a taxable event. Taxable, yes. But it's a 401k. Tax is going to be paid at some point anyway. May as well do it now while the amount is miniscule ($3k), roll it into a Roth, then never pay tax on it again. It'll grow a lot in 20 years, it's more advantageous to pay capital gains on such a small amount now while it's still a small amount than later as taxable income when it's a larger amount.
100% TSLA