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Posted: 2/14/2006 7:08:53 PM EDT
My wife and I are making a lot of money back on are tax return and I'm talking about $6K+ from her alone. Now we are wanting to take this money and use it for a downpayment for a house but we are also wanting to place a little of it like $2k or more in the market or a Mutual Fund..

Now I'm just a dumb grunt I know only killing and how to make your house look clean. What I'd like to know is what is the best way to invest this money? What are some good company to invest in to?

Thanks for the help and yes I did try the whole "Honey we can invest the money in to a new SA 58 and M1A rifle for me? and this is what I got back from her .

Thanks for the help guys and if my spelling sucks sorry.
Link Posted: 2/14/2006 7:14:09 PM EDT
[Last Edit: 2/14/2006 7:15:03 PM EDT by raven]
Open a Roth IRA if you dont have one already for your retirement. This is a great scheme. Not only are any gains tax-emempt, and income derived for investments are tax exempt as well. The drawback is that you can only contribute $4000 a year (although that's going to be raised to $5000 a year soon) but that should be fine if both you two open Roths and have money left over from the down payment.
Link Posted: 2/14/2006 7:15:48 PM EDT
This would be better asked in the Business and Investment forum
Link Posted: 2/14/2006 7:19:37 PM EDT
Are ya puting at least 20% down on the house? Or least avoiding the PMI? Any credit card debt?
Link Posted: 2/14/2006 7:34:14 PM EDT
You might also want to change your withholding so you've got more per check rather than that large of a refund. I always liked the refunds too, but that's huge.
Link Posted: 2/14/2006 7:49:47 PM EDT

Originally Posted By raven:
Open a Roth IRA if you dont have one already for your retirement. This is a great scheme. Not only are any gains tax-emempt, and income derived for investments are tax exempt as well. The drawback is that you can only contribute $4000 a year (although that's going to be raised to $5000 a year soon) but that should be fine if both you two open Roths and have money left over from the down payment.



I was thinking of that also but I think the wife wants to use this for are home or she wants to use it for are kids collage right now. But I do want to see if I can get my 401K and roll it over to a IRA before I get out of the Marine corpe. I only got 43 days left!!!!1



Originally Posted By GoGop:
You might also want to change your withholding so you've got more per check rather than that large of a refund. I always liked the refunds too, but that's huge.



It was not me this year it was my wife she was making 4x the amount I made per month and the sad part was she only worked 96 hours a month.



Originally Posted By BigMHoff:
Are ya puting at least 20% down on the house? Or least avoiding the PMI? Any credit card debt?



Using the Va home loan don't have to place a downpayment but we want to . The homes we are looking at are in the low to under $100k in Carbondale IL.
Link Posted: 2/14/2006 7:59:51 PM EDT

Originally Posted By tayous1:

Originally Posted By raven:
Open a Roth IRA if you dont have one already for your retirement. This is a great scheme. Not only are any gains tax-emempt, and income derived for investments are tax exempt as well. The drawback is that you can only contribute $4000 a year (although that's going to be raised to $5000 a year soon) but that should be fine if both you two open Roths and have money left over from the down payment.



I was thinking of that also but I think the wife wants to use this for are home or she wants to use it for are kids collage right now. But I do want to see if I can get my 401K and roll it over to a IRA before I get out of the Marine corpe. I only got 43 days left!!!!1



Put the money in a Roth. You can always take out the original deposited money. Call Fidelty. They can set you up and tell you the rules. A Roth is an unbeliveable savings vehicle. Everyone on this board should max out their Roth's every year.
Link Posted: 2/14/2006 8:07:38 PM EDT
NFI in a Roth. Current yield at about 20%.

www.nfi-info.net
www.novastarmortgage.com
www.thesanitycheck.com
www.ncans.net

Do your due diligence. Ask questions and read alot. I own it... +1000 shares and growing.

You can also buy it through the Direct Stock Purchase plan. No brokerage fees and you can get it at a 1 to 3% discount on occasions. I buy it this way too, when I have cash in hand.

good luck.
Link Posted: 2/14/2006 8:14:14 PM EDT
BTW, I believe a married couple can put up to $8K into a Roth per year, $4K per person. It's an excellent deal.

If you're in California I'd be very, very careful about buying a house right now. Prices have dropped about 5% from their peak, and the number of houses on the market and average time on market has been going way up since last November, which indicates prices are likely to drop more. Because of leveraging you can lose a lot of money fast in a falling market. Suppose you put 10% down, and the value of your house drops by 10%. You've just lost your entire down payment if you have to sell--and if you're in the military you're probably moving every few years.

Compare the cost of renting to the cost of buying in your area. In most of coastal California it costs about 1/2 as much to rent as it does to buy to live in the same place.
Link Posted: 2/14/2006 8:26:38 PM EDT
I think the real estate market in general and the non-conforming mortgage guys like NFI in particular are going to have a giant meteor smash into them over the next 3-5 years. There's no way that the current coastal housing market is rationally priced. A drop in housing prices and/or an increase in interest rates, combined with roughly $1 trillion in ARM mortgages reseting in 2007, and people will be handing in their keys to the bank and walking away from the mortgage.
Link Posted: 2/14/2006 8:35:20 PM EDT
[Last Edit: 2/14/2006 8:36:52 PM EDT by OFFascist]

Originally Posted By Q3131A:
Put the money in a Roth. You can always take out the original deposited money. Call Fidelty. They can set you up and tell you the rules. A Roth is an unbeliveable savings vehicle. Everyone on this board should max out their Roth's every year.



My current employer, Walgreens, has given me some stock options, and to get them I had to set up an account with Fidelity. I'll probably hang onto the stock for a while, but while on thier website I saw some ads for Roth IRAs and that got me interested in them last night. I'm 24 and havent done any savings for retirement yet but I looked up some info on them and will probably open one up in the near future, but I got a few questions.

So what exactly happens to the money you put in an IRA? Its invested, but into what and by who? Do I decide what to invest in, or does the company I set up the account with decide on thier own.

Also is there any benefit to setting up an IRA with one company over the other.
Link Posted: 2/14/2006 8:37:33 PM EDT

Originally Posted By tayous1:

It was not me this year it was my wife she was making 4x the amount I made per month and the sad part was she only worked 96 hours a month.



If you wife makes a ton of money, you may not be able to put it in a Roth IRA - there is a cutoff, above which you are not allowed to take advantage of the Roth. Definitely remember to check into that if you decided to put some of it in a Roth.
Link Posted: 2/14/2006 8:46:03 PM EDT
Are you active duty? If so, are you a participant in the TSP? That would be a good way to invest some or all. I do not remember how much you can put in aside from what is deducted, but it is a good option.
Link Posted: 2/15/2006 10:27:10 AM EDT

Originally Posted By OFFascist:
So what exactly happens to the money you put in an IRA? Its invested, but into what and by who? Do I decide what to invest in, or does the company I set up the account with decide on thier own.

Also is there any benefit to setting up an IRA with one company over the other.



Here is my advice. It is free, so take it for what it is worth:

1. If Walgreens offers matching on their 401k, you should contribute the maximum necessary to get the match. My employeer matches 50% of the first 6%. It's free money so take it.

2. Roth IRA is the second vehicle I suggest. The Roth is "after tax' money. But all proceeds are tax free for life. Since you are 24, you have 25 1/2 years before you can take the proceeds out. So, if you put $4k per year in, you can take the original $4k out without penality. If your $4k makes $1k. That $1k must wait until you are 59 1/2. See Roth IRA rules.

The great thing about a Roth IRA is that the proceeds are non-taxable after 59 1/2. So, if the gov't has to raise tax rates to 50% or more to pay for the babby boomers social security, your 401k distributions are taxed, your Roth distributions are not.

If you set up a Fidelity Roth IRA account, you determine what to buy with the money. There are hundreds of mutual funds you can buy with the account. By having a Fidelity account, you can move between funds when you want to.

Bottom Line: If you are employeed, no matter what your age, everyone should be doing steps 1 and 2 above. IMO, doing the two steps above is even more important than getting out of debt.
Link Posted: 2/15/2006 10:37:29 AM EDT
If you are getting this much back, the government is witholding too much of your pay check.
You arent 'making money" when you get a refund...they are simply giving you back your own money after they have had the opportunity to earn interest on it all year. I say, change your W4's and start getting bigger paychecks. Invest the extra money you bring in and have enough available to pay your taxes at the end of the year. It's your money...you should be the one holding on to it for the majority of the year.
Link Posted: 2/15/2006 10:46:19 AM EDT
[Last Edit: 2/15/2006 10:46:38 AM EDT by jthuang]

Originally Posted By DK-Prof:
If you wife makes a ton of money, you may not be able to put it in a Roth IRA - there is a cutoff, above which you are not allowed to take advantage of the Roth. Definitely remember to check into that if you decided to put some of it in a Roth.



+1 ... if your AGI (adjusted gross income) is over $110k (single, not sure about the married limit) then you cannot participate in the Roth IRA. If you make more than the AGI limit, it sucks because the Roth is a great investment vehicle!
Link Posted: 2/15/2006 12:15:08 PM EDT

Originally Posted By jthuang:

Originally Posted By DK-Prof:
If you wife makes a ton of money, you may not be able to put it in a Roth IRA - there is a cutoff, above which you are not allowed to take advantage of the Roth. Definitely remember to check into that if you decided to put some of it in a Roth.



+1 ... if your AGI (adjusted gross income) is over $110k (single, not sure about the married limit) then you cannot participate in the Roth IRA. If you make more than the AGI limit, it sucks because the Roth is a great investment vehicle!



As always... Check the rules.
Link Posted: 2/21/2006 6:26:03 AM EDT

Originally Posted By macro:
If you are getting this much back, the government is witholding too much of your pay check.
You arent 'making money" when you get a refund...they are simply giving you back your own money after they have had the opportunity to earn interest on it all year. I say, change your W4's and start getting bigger paychecks. Invest the extra money you bring in and have enough available to pay your taxes at the end of the year. It's your money...you should be the one holding on to it for the majority of the year.



This was for my wifes pay that she getting back the $6k she thinks it was also do to the exter money she got when she got the job. I'm only making $2k back and thats because I'm claimming my kids.
Link Posted: 2/21/2006 6:37:58 AM EDT
[Last Edit: 2/21/2006 6:41:10 AM EDT by lordtrader]
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