Roth 2013

Last year I put my Roth contribution in a Fidelity sector fund concentrating on banking and investing (Fidelity Select Financial, FIDSX). It did pretty well and after it went up 20% I exchanged it for a high-yield bond fund in September (FAGIX). I wanted something more conservative than equities which had gone up a good bit, and it seemed like there was still a lot of turmoil ahead relating to the fiscal cliff. However, I think FIDSX ended up a little ahead of where I sold it.

For 2013, I realized that I could put the entire contribution in an existing Roth fund I already have, Vanguard’s Small Cap Value (VISVX), and that would get that balance up high enough to upgrade to Vanguard’s “Admiral shares” which have a lower expense ratio. It isn’t a huge difference, 0.24% for VISVX and 0.10% for the admiral shares (VSIAX), but why not? It’s half the cost.

To fund it, I figured I would sell some emerging market shares (VEMAX) I have that have gone up 20% since I bought them and then buy the rest of the $5,500 maximum allowable contribution with some short-term bond fund shares.

Not real exciting, but I do think small caps will continue to do well this upcoming year. Now that I’ve paid off my mortgage, I also went ahead and maxed out my deferred compensation contributions for 2013 and opened a 401k, which seems like double-dipping, but you are allowed to do both. I may have bit off too much by adding the 401k, but I can reduce it later.

3 thoughts on “Roth 2013

  1. One advantage of being your older brother is I am able to take advantage of 401K catch-up contributions. If you are old enough you get to contribute more to “catch up” in case you are behind. I’m not behind, but there is no “behind rule” so I’m catching up.

  2. This was a crazy year, with the stock market up 30%. Using money from my emerging markets fund in January to buy small cap shares in my Roth turned out to be great because the emerging market fund lost 3% while the small cap fund was up 30%. In September the small cap shares were up over 20% (my usual sell trigger), so I sold most of what I had bought this year and put it in short term bonds, thinking a correction must be on the horizon. The correction never came and the small cap shares went up another 10%.

    Meanwhile in July, I sold my high-yield bond shares in my Roth account at Fidelity and bought Fidelity Low Priced Stock shares, a fund with the curious strategy of buying stocks whose share price is less than $35 a share. It is a 5-star fund, but no Apple or Google, I guess. I may have missed its best years, but it is up 15% in the 6 months I have owned it (the rise in stocks has been disturbingly steady).

    I’m still not old enough to do any catch-up contributions yet, but I managed to stick with taking out money for both my 457b and 401k plans at work, getting around the maximum contribution limit that most people would have. Since my retirement pension should be 60% of my salary and I am contributing 30% of my salary now towards retirement (taking home 70%), I should be able to take home more during retirement than I do working when I add in deferred comp and IRA withdrawals. Although you can’t take out earnings from a Roth IRA until you are 59.5, you can take out the principle and I figured that if I retire at 55, I should be able to take out regular payments from the Roth without exhausting the principle until after 59.5.

  3. Pingback: 2014 Roth | Ted's Blog

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