What Is The Best Account For Saving Up For Retirement And Buying A House?
I аm 18 аnԁ i'm already starting tο save up fοr mу retirement. Rіɡht now I already hаνе a ɡοοԁ ammount saved up аnԁ I wаѕ јυѕt wondering whаt type οf account (ROTH IRA,..etc) ѕhουƖԁ I ɡеt tο save up a ɡοοԁ lump sum οf money before οr whеn I hit 30. Thats whеn I рƖаn οn buying mу house.
You need to have two seperate things. For retirement you need to get an IRA. There are different types of IRA’s to go into. Just go to your local bank and ask if you can set up an appointment to speak with an financial adviser. More times than not they are free at first. Then you need to have a regular savings for your house savings. I do not think that it would be wise to take from your IRA once it is established to put towards buying your home. You can go to http://www.crown.org. It really does give you sound advice on budgeting, saving, as well as investing. You don’t have to be a christian to use there methods. Good luck and God bless.
For retirement, you can’t beat IRAs. As to whether it should be Roth or the other, I don’t know.
You should learn about investing in general. In my opinion, investing in index funds is the way to go.
Go to the link and read about “Couch Potato Investing,” about 1/2 way down the page on the mid-right.
In your situation, the Roth sounds like the best vehicle that can be used to accomplish both objectives. For retirement, you’re young and the tax free compounding that the Roth has to offer will put you way ahead of the game. Check out the Roth vs. Traditional IRA calculator at http://www.dinkytown.com. For your home, with a Roth IRA, after 5 years you can take out your principal without any penalties. Of course there are no taxes due because the Roth was funded with after tax dollars. Check out publication 590 at http://www.irs.gov. It has all of the rules for retirement plans and is easy to read with a lot of examples.
Keep in mind, if you have a retirement plan at work and there is matching, I would take advantage of that as well. The matching is instant return on your investment.
The Roth IRA allows you to take out as much as $10,000 for a home purchase. There are other restrictions. read up on the Roth IRA.
This answer is a little off topic, but if you take my advice it could save you thousands in the long run.
Why are you waiting 12 years to buy a house?
Depending on your current situation ie. are you living at home, do you live on your own, do you have a job etc.
If you have a job and are living at living on your own I strongly reccoment buying a house, if not a house then a small town home, or even maybe look into getting a multifamily property (duplex, triplex. 4-plex) then rent out the other units.
There are many books on the topic, but the main reason I urge you to buy sooner rather then later. Interests rates are increasing, which mean few people are buying and the demand is decreasing, and the supply is still increasing, which means people want to sell there homes, but people do not want to pay high interest rates.
If you are willing to get that higher interst rate you can go and get your property, have people rent out the other units (who will pay for your mortgage) and you can live with minimal expenses, and keep what money you would be saving up for a down payment in an investment account in your investment account, rather then waiting for home prices to keep increasing on average 5% a year(which means you could save 60% on your house if you bought now, rather then when you are 30)if you have a job and a little money saved up, then you should have little trouble getting financing. I can reccomend a guy who just refinanced my parents for a 1% APR. THIS IS NOT ME, I AM NOT TRYING TO ADVERTISE.
If you have any questions on the topic please post them or let me know directly.
Start with your employer. If they have a 401K or 403b with a matching amount, put the max amount in. Next is a Roth IRA because you won’t get taxed on it when you take it out. Then a regular IRA. Talk to a financial consultant, but make sure he’s independent and fee based, NOT COMMISSION, and is not a franchise for some brokerage who will try to sell his hottest stock to you. Best place for info is
http://clarkhoward.com/
Spend some time here and read his stuff on buying houses and investing for the future. Smart guy, makes sense.