Let’s Get Excited About Investing
So I told you I’d tell you about my NEW 2018 BUDGET, and how it includes PERSONAL NON-RETIREMENT INVESTING.
As you know from all those charts I made in December, I have been trying to figure out exactly how much money should go towards my business, my HSA, and my retirement accounts in 2018, in order for me to save $3,600 by claiming my health insurance subsidy. (In addition to saving $3,600, I’ll also reap the benefits of a HSA, more retirement savings, and more money spent on my business. I know I’ll need a new laptop this year!)
When I initially did the numbers, I calculated them as follows:
- 5 percent pretax income for the HSA
- 5 percent pretax income for the IRA
- 30 percent pretax income (after subtracting the HSA and IRA contributions) set aside for taxes
- 5 percent pretax income put in a savings account
Everything left over goes towards business and personal expenses.
But then I asked myself how hard it would be to set aside another 5 percent of my pretax income for personal investing.
And now that’s the plan.
I did a quick survey of the various roboinvestors and then decided to stick with Capital One Investing, first because I’m already familiar with it and like the functionality, and second because several of the roboinvestors wanted me to set a goal for my investment dollars, and I don’t have a goal. I just want my money to earn more money, and I’ll figure out what to do with it later.
I’m going to shove the cash into a low-cost index fund with a low minimum investment requirement, so I can get started right away — do you want to know the actual funds I’m investing in, or is that too much like me recommending investments? — and I’m currently trying to figure out whether it’s smarter to make a small investment every week or a larger investment every month. I know that the market is WAY SUPER HIGH right now, but I’m hoping that by dropping steady amounts of cash into this account over time it’ll… well, sometimes I’ll buy low and sometimes I’ll buy high and it’ll even out, I guess.
I really have no idea what I’m doing. I am going to the library this afternoon to get the newest edition of The Bogleheads’ Guide to Investing, in the hopes that I’ll get a slightly better idea.
The other big question is whether I should put my retirement dollars into a traditional IRA or a SEP IRA. I had assumed it would be a traditional IRA, because I actually started the SEP application process and shut it down after seeing a bunch of questions like “what is the name of your business” and “how many employees do you have?” But then I listened to the Oh My Dollar! podcast episode on tax savings, which advised freelancers to open SEP IRAs, and now I’m going to ask my CPA whether I can go ahead and open one even though my business name is “Nicole Dieker” and I don’t have any employees.
Anyway, I am very very very very excited about all of this — and I’ll share everything I learn as I go along.
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