Wednesday, April 19, 2006

Roth Update

Since I have yet to re-activate my 401k (it's a long story) I have decided that until I do I will try to max out my Roth as soon as possible so I can just check that off for the year and move on to other savings (like getting back to the 401k)

Basically my company's financials are not healthy right now and the prospects are iffy. It really could go either way. So I am prioritizing my Roth savings right now for a couple of reasons:
  1. If the company folds and I absolutely need to, I can access money I've contributed to my Roth (but not any earnings) without penalty. So my Roth is a dire-emergency fund in a manner of speaking. I cannot access 401(k) savings in this way, I would have to borrow it from myself which is harder to do if you are unemployed
  2. I'd rather get my Roth maximized and full invested ASAP instead of seeing my 401(k) money used as an unofficial "float" to cover cash flow problems. Sometimes my money would hit my account 6 weeks after my payday so that's 6 weeks of lost investing time.
To this end, I have added $1200 to my Roth this month instead of the predicted $400 and therefore I am already at 40% of my goal.

If the company's financials make a comeback I will try my hand at "power-saving" so as to not lose the pre-tax opportunity that the 401(k) gives me.

1 comment:

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