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Okay, so I've been saving very regularly, about 25%-40% of my income over the past 8 months and I expect to have ~$20k by the end of April at my current earnings/savings rate. I have $18.3k currently, $16k in my "EF" at Ally earning 1%. I'm stable enough that I've definitely decided to invest. I've been doing my research and following the markets for a while now (radio and apps) but I do have some questions that Google didn't quite answer conclusively.
Side note: I have opened Betterment, Wealthfront and Vanguard accounts but have only invested in Betterment's 80/20 portfolio as yet. ($400). Accidentally put money into Vanguard before realizing I needed $1k minimum, ideally $3k. Unfortunately it's going to be at least another week before my bank is "verified" and can switch it over to Betterment. Ugh. From reading this forum I know some of you are long time Vanguard fans but their website could use a makeover. Very confusing for first time investors.
Anyway, here are my questions:
1. I have already filed my 2015 return and received my refund. Is it too late to claim a credit for putting at least $2k into my Roth by April 18 for the 2015 tax year? I would be eligible for a 20% credit. Is this something I can get done next tax season (and still get the credit for last year's contributions)?
2. If the above answer is NO, should I max out 2015 anyway? And if so should I do it in one lump sum or do dollar cost averaging? (I only have until April so the contributions would be large.)
3. Is there a magic formula for what percent should I invest, save for emergencies, etc.? I'm relieved that with Roth IRAs the principle can be withdrawn tax free at any time. If I had $200k I might do something different but with my relatively limited savings I don't want it all tied up in a MM or CDs. I know everyone's situation is different but I'm having a very difficult time deciding what to do. Should I just max out for '15 and '16 and save the rest in my EF? $18.3k - $11k (2 x 5,500) still leaves me with $7,300 which would cover my living expenses for 8 months. (I am very frugal/cheap.) Is there such a thing as a "too large" EF?
Thank you for any answers. Sorry if my post is redundant in any way.
Side note: I have opened Betterment, Wealthfront and Vanguard accounts but have only invested in Betterment's 80/20 portfolio as yet. ($400). Accidentally put money into Vanguard before realizing I needed $1k minimum, ideally $3k. Unfortunately it's going to be at least another week before my bank is "verified" and can switch it over to Betterment. Ugh. From reading this forum I know some of you are long time Vanguard fans but their website could use a makeover. Very confusing for first time investors.
Anyway, here are my questions:
1. I have already filed my 2015 return and received my refund. Is it too late to claim a credit for putting at least $2k into my Roth by April 18 for the 2015 tax year? I would be eligible for a 20% credit. Is this something I can get done next tax season (and still get the credit for last year's contributions)?
2. If the above answer is NO, should I max out 2015 anyway? And if so should I do it in one lump sum or do dollar cost averaging? (I only have until April so the contributions would be large.)
3. Is there a magic formula for what percent should I invest, save for emergencies, etc.? I'm relieved that with Roth IRAs the principle can be withdrawn tax free at any time. If I had $200k I might do something different but with my relatively limited savings I don't want it all tied up in a MM or CDs. I know everyone's situation is different but I'm having a very difficult time deciding what to do. Should I just max out for '15 and '16 and save the rest in my EF? $18.3k - $11k (2 x 5,500) still leaves me with $7,300 which would cover my living expenses for 8 months. (I am very frugal/cheap.) Is there such a thing as a "too large" EF?
Thank you for any answers. Sorry if my post is redundant in any way.
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