We will invest for our retirement and future via several platforms. Roth IRA’s, a Roth 401K, 529 Savings accounts for our children, a brokerage account, and a DRIP program.
The goals for investing in our Roth IRA’s are:
1. Maximize contributions of $5,500 a year for each account to equal $11,000 total. This is equal to approximately 19.6% of our current gross annual income.
2. Invest wisely in dividend growth stocks in order to provide a continuous inflow of cash throughout the year. The first goal with dividend investing is to reach $5,500 a year in dividends across our IRA accounts combined. I look at this as “snowball” accelerator, or snowball maker, in essence making up for lost years of IRA contributions through poor investment choices in the past and failure to max out contributions earlier in life. Once we reach $5,500 a year of dividends flowing into our Roth IRA’s, the goal will increase to $11,000, and then $16,500…you get the point.
3. When contribution limits are reached each year, continue to save 8% of the annual limit each month in a savings account, to be deposited on or around 1 January of the next year. The math is as follows: 11,000/12=916.67 916.67/11000 = 8.3% We won’t make it all the way but it is a mile marker to run towards. As of May 1 2015, we have maxed out one IRA and have about $1500 to go until we max out the second. At the current rate we will max out the second on or around the second week of August.
For the Roth 401K:
1. Save 10% of my paycheck each month toward this program. My employer provides a set of extremely low cost investment funds which will help maximize returns over the long term.
For the 529 Savings account:
1. Yes, we know that we can’t use this money for retirement. But we’re also saving for the future and for our children’s future. Setting aside money now for their education expenses in the future is an investment we strongly believe in making. We will save approximately $200 a month in each account. Down the road there will be no need to withdraw money from our Roth IRAs, the brokerage account, or take out a large loan to support our children if they choose to go to college.
For the brokerage account:
1. We will make investments through this account when we have extra capital on hand that will not be used elsewhere.
For the DRIP Plan:
1. We have a plan through ShareOwnerOnline to purchase $100 of Realty Income Corp each month. Over time this snowball will grow and grow. We will pay taxes on dividends received in this account, but the dividends will reinvest each month and we do not plan on selling shares for at least 10 years. This plan was started in February of 2015.
What do you think? What’s your plan?