Retirement and 529 Advice

I would suggest talking to a financial advosir that you trust. Get some recommendations from friends, hubby's job, etc and not someone where you just walk in from the street.

The numbers you mention are about right for that amount of $.

We are very much into the numbers and financials and as Jo said... watching the markets and the fluctuations will make you go gray faster.. my hubby certainly did. It is crazy, make $20,000 one day and lose that plus more the next. It is not a fun ride to be on!! You can't put all the eggs in 1 basket.. we have a couple of high risk funds and we have the safe funds at little to no risk which make a lot less $$.

Get with someone, explain your goals, and they can help you set up a plan so you can achieve your goals. Good for you for working on this and for thinking about your future and your children's future.

I know 529 are important, and we have them for our kids, but you do not have to pay for your kids college. It is more important to have a retirement account, than 529s. Kids can get loans and scholarships to pay for college. If money is tight, worry about retirement, get that set up and make sure you actually have enough to retire when the time comes and then focus on 529s. Also, with 529s, you don't have to get them in the state you live, and Texas does not have the best 529 plan. Last time I looked, and I need to look again, I thought it was Utah that had the best. Unfortunately, my husband works for State Farm and when we use them, we have to use the state we live in and can't shop around. My dad swears by Fidelity. They have done really well with his retirement account and even during the financial collaspe, he didn't lose as much as everyone else.

I'm no expert on finance, but what I can tell you is the bank did not make the choice on where to put that money. They may have given advice, but ultimately it was the decision of whomever opened the account. And Jo is right, the way the market is right now, you can make $, then lose it, then make it again over and over and not see growth. These are tough times we're living in.

Yes. Unless you specifically tell them where to put the money, outside of a retirement plan at work, they have to default to the most conservative investment. This is to protect you from market loss. If you passively enroll in a retirement plan at work there is something called a QDIA (Qualified Default Investment Alternative) which means that the employer can pick a pre-diversified investment portfolio of an appropriate risk for an employee's age. This is because many people don't know what to pick or don't pick anything at all so rather than have your money sit in a money-market or stable value investment earning nothing, even if you don't pick you investments you stand a fighting chance of earning something. Private IRA accounts at banks don't have QDIA protection so they have to put you in something conservative. The lesson here is to always be an active investor, know what you're invested in and check your balances and earnings at least quarterly. At least you didn't lose money, right?

If your husband's current job has a retirement plan, start there. I'm assuming he doesn't based on need to roll over to a bank but if that's not the case, make sure he is using the plan at work and is contributing at least enough to get any company match. He can roll over his IRA into his new 401(k) if he has one.

IMO, Fidelity has the best 529 plan (and I cringe writing that because they are a competitor of my company). If your state has a 529 plan that includes additional perks like state income tax deductions then go with that but if they don't offer anything extra, go with Fidelity. Their minimum account opening is $50.

BTW I honestly think your bank is screwing with you. According to info I found on the web, the minimum investment for the Lonestar 529 plan is $25 and only $15 if you sign up for automatic contributions.

You'll need to work out how much you can save for each goal - someone like Dave Ramsey or Suze Orman (you can get their books at the library and there is a lot of basic info on line) can help with understanding how much life insurance you need, how much you need to save for retirement, how to pay down any debt and build emergency savings and then after all that, how much you can afford to save for college. College savings is nice to have but last on the list.

Good for you for planning for the long term even on a limited income. Educate yourself and take baby steps and you will reach your goals!

Sounds like the IRA may need to be invested differently.
I haven't been able to really figure out the advantage of a 529 in Texas, and I have not started one. Since we do not have a State Income tax, it isn't going to provide the tax advantages that it does in other states. The money in the 529 belongs to your children, not to you if you have a financial emergency. Yes, you need to save for college, but you can do that in a regular account that you earmark for that purpose vs setting up a 529. If you do want to do a 529, though, there are multiple options that are less expensive to set up. Take a look at ING Direct and/or google 529 Texas for options. I've found that on-line accounts often pay better rates that than banks and credit unions. Credit unions often pay better rates than banks.

That actually does seem about right. I know 7,000 sounds like a lot but it really isn't. You can try moving it into a brokerage type account but I can tell you watching the market fluctuations will cause you to grey prematurely. You look at that 36 cents but imagine you check on your account and you lost 500, check the next month and the five hundred is back but nothing more......

Until interest rates go up 36 cents is where you are at. Really with the amount of money you are talking about with the 529s you can expect more of the same. :(

I am not in any way saying what you are considering is a bad idea. After all money saved is money that you don't have to borrow down the line. I guess I am just saying you need to realistic on what you will earn.

I don't really know much about money markets, or why your bank decided to put the money into that kind of account. I do know that our Roth IRAs have been earning very little, as well as our 457s at work. It began to feel like we were just tying up cash for no real benefit, so until the interest rates go back up, we've stopped adding to our IRAs and reduced investments in the 457s to $25/month, which is what our employer matches. The rest just goes into our regular savings, which earns only slightly less than the IRAs, and can be easily withdrawn without penalties if some emergency should arise.