Priority of investments a Colorado teacher might want to consider.

 

Here is a general funding priority that often works well for many PSD teachers (not all points will apply to everyone):

1.    Establish an Emergency fund to your satisfaction. (3 to 6 months of expenses) I keep my emergency fund in a high interest savings account at Ally Bank.  In fact, I do all my banking with Ally Bank and love it!

2.    Pay off high interest debt.  This might include car loans, student loans, credit card debt, etc.

3.    Contribute the maximum to Roth IRA (6k/yr). I go directly through Vanguard. A target date fund that matches your approximate retirement date is a prudent choice. You can call them and they will help you set it up. If you go through a financial advisor, you will pay high fees!

4.    Contribute the maximum to PERA 401(k) or 457(b). (19.5k/yr) Use the 457 if you plan to retire early.

5.    If higher income household, contribute maximum to which ever you didn’t use above, in step 4.  This is another 19.5k/yr.

6.    Contribute to a taxable investing account,  Again, I go directly through Vanguard.

Once you know your retirement is in good shape, consider saving for your children’s college at Colorado College Invest.  I use Vanguard’s age based plan.  You can can choose conservative, moderate, or aggressive.

A teacher’s  tax bracket may influence the decision as well: those in higher tax brackets should consider higher contributions to a tax-deferred plan (e.g. traditional 401(k) or IRA) rather than a post-tax plan (e.g. Roth 401(k) or IRA); see Traditional versus Roth for more guidance.

Source: This list was adapted from my favorite investing site, www.bogleheads.org. https://www.bogleheads.org/wiki/Prioritizing_investments

Nothing presented is to be construed as investment advice. Investment advice can be secured from a vetted Certified Financial Planner (CFP®).When working with a CFP®, it is recommended that s/he sign a Fiduciary Pledge. More information, including questions to ask a planner and a downloadable Fiduciary Pledge, can be found here: https://403bwise.org/education/professional