Posted: 5/14/2026 10:10:09 AM EDT
[Last Edit: Mav3rick][Edited]
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I recently moved some funds over (10% penalty free) from a bad annunity that I am stuck in and cannot get not out of surrender with charges until 2030 into a newly created traditional IRA under my fidelity account and am looking for suggestions on how I should invest the funds-6K in there right now. The fidelity rep who helped me do this suggested their Freedom Index 2040 mutual fund that has a expense ratio of .12%. I don't know much about mutual funds and generally lean towards passively managed ETFs with very low expense ratios, and currently have a roth ira at fidelity setup with some (SCHD, SPYM, SCHG). Before I go forward with their suggestion I figured I would ask you guys here for some suggestions. I plan on moving 10% over each year from the bad annunity until it is out of surrender, then will move the remainder of whatever is left in it over surrender free after the market value adjustment. It will be in total around 60K give or take depending on the final MVA. Thanks, Mav |
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Originally Posted By Mav3rick: ....looking for suggestions on how I should invest the funds-6K in there right now. ....... currently have a roth ira at fidelity setup with some (SCHD, SPYM, SCHG). If you're over a decade away from using the cash then pick a low/zero fee fidelity fund of your preferred index and forget about it. Dividend producing investments are usually a poor choice for a roth ira unless you are planning to withdraw the money in the short term. The entire point of a roth is that gains are tax free, so you should have your more aggressive investments in your roth. #1 regret of retired people is not saving more and/or earlier. #2 regret is not investing more aggressively when they were young. Countless threads here and in GD regarding how prioritizing dividends crushes your long-term returns. I would skip the dividends unless you are withdrawing the money within a couple years. |
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Originally Posted By Morgan321: How old are you? When do you plan to use this money? If you're over a decade away from using the cash then pick a low/zero fee fidelity fund of your preferred index and forget about it. Dividend producing investments are usually a poor choice for a roth ira unless you are planning to withdraw the money in the short term. The entire point of a roth is that gains are tax free, so you should have your more aggressive investments in your roth. #1 regret of retired people is not saving more and/or earlier. #2 regret is not investing more aggressively when they were young. Countless threads here and in GD regarding how prioritizing dividends crushes your long-term returns. I would skip the dividends unless you are withdrawing the money within a couple years. 52-plan on retiring at 65 so won't need the money until then and even then probably won't need it right away as I have 401k, roth ira, and HYSA. |
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Originally Posted By Mav3rick: 52-plan on retiring at 65 so won't need the money until then and even then probably won't need it right away as I have 401k, roth ira, and HYSA. You're giving up lots of tax free profit by focusing on dividends over such a long term.  |
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Why both Roth IRA and traditional? You can’t contribute more than $8600 regardless if it is Roth or traditional. You don’t get $8600 each. It’s just $8600 amongst ALL IRAs. If your traditional IRA isn’t deductible, you are better with Roth. Going traditional just means your gains are eaten up with Roth. If you have a 401K type plan at work and make over a certain dollar amount, your trad IRA isn’t deductible. |
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Originally Posted By Joe_Blacke: Why both Roth IRA and traditional? You can’t contribute more than $8600 regardless if it is Roth or traditional. You don’t get $8600 each. It’s just $8600 amongst ALL IRAs. If your traditional IRA isn’t deductible, you are better with Roth. Going traditional just means your gains are eaten up with Roth. If you have a 401K type plan at work and make over a certain dollar amount, your trad IRA isn’t deductible. Its a long story, but I had a bad financial person take advantage of me during early covid-April 2020 and talked me into moving some money into a fixed annunity that is aweful and it locked in until 2030. I was told for a long time by another bad financial advisor that nothing can be done. I started taking my retirement savings and investing into my own hands last year and am trying to right some of these wrongs that were done by these people. So right now I can only move 10% out penatly free each year slowly to a regular IRA-can't move it to my roth because it is qualified annunity. Yeah I understand about the 8600-I am mostly focusing on my roth and there is where the 8600 is going this year. Next year I may split half to each-will look more at that next year. |
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Originally Posted By Morgan321: I would drop the dividend investments in your roth like a bad habit and go with low/zero fee sp500 or nasdaq funds. You're giving up lots of tax free profit by focusing on dividends over such a long term. https://i.ibb.co/ZpFn0cnb/IMG-0783.png I am only 20% invested in schd, the rest is in growth and sp 500 etfs (spym and schg). |
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I have some of my money in 2040 target date fidelity fund. it does OK https://fundresearch.fidelity.com/mutual-funds/summary/315793885 |
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Originally Posted By FALARAK: VTI and chill, or if more conservative, pick a 2050-2060 target date fund and chill. |
Who, What, Where? Call Sign, Snowball
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Originally Posted By Saker13: I just started funding a Roth IRA and went with VT and chill. Is there a benefit to VTI over VT? I have VTI in my taxable brokerage account but haven't compared the two. Originally Posted By Saker13: Originally Posted By FALARAK: VTI and chill, or if more conservative, pick a 2050-2060 target date fund and chill. It's just a philosophy difference. VTI is Total US Market index, VT is global. People who subscribe to a more international/balanced approach will choose VT. I personally feel that the largest companies in the US already have significant international exposure and that's enough for me. But a blend of VT/VTI is not a bad thing at all. |
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Originally Posted By FALARAK: It's just a philosophy difference. VTI is Total US Market index, VT is global. People who subscribe to a more international/balanced approach will choose VT. I personally feel that the largest companies in the US already have significant international exposure and that's enough for me. But a blend of VT/VTI is not a bad thing at all. |
Who, What, Where? Call Sign, Snowball