What to do with a small amount?

[dingdong28]

I'm not a physician but a med lab tech looking for financial advice.

I have a little over $2,200 in a Rollover IRA account that I'm looking to use for investments or adding to my retirement account. I know this isn't much but I know squat about investments. I know that I'm contributing 3% to a 403(b) account and will up it to 6%. I believe this has been opened for a few years now. The $2,200 came from when I transferred to different hospital system.

What is something that I should do with this account? I've had it sitting in there for quite a while because I didn't want to do anything stupid with it. I don't much about investing into stocks or anything. The only thing my father always told me to do was to invest in a retirement fund because my family has never had the income to invest in stocks and such.

If needed, I'm currently examining my options for attending professional schools but have not made a decision yet given my post history. I've been tempted to sit back and enjoy the ride as a lab tech but I won't be satisfied and will be left wondering what else I could have done.

Thank you for any advice

Edit - wanted to add that I'm trying to stay in the military reserves to obtain retirement benefits at 20 years. Looking to commission to extend the number of years and retire with extra benefits (50% base pay at 20 years in your grade once you hit 65 (or is it 60?), add 2.5% per year after 20). Staying enlisted caps me at 33 years but commissioning (and the amount I receive since officer pay is higher than enlisted) can extend to 40 if I wanted to stay in that long.

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[Stroganoff]

I have a little over $2,200 in a Rollover IRA account <snip> What is something that I should do with this account? I've had it sitting in there for quite a while because I didn't want to do anything stupid with it. I don't much about investing into stocks or anything. The only thing my father always told me to do was to invest in a retirement fund because my family has never had the income to invest in stocks and such.

What company is the Rollover IRA account with? It's possible it's decaying away with maintenance fees (as an ex-employee) or in funds with high expense ratios.

Probably several options:

1. Keep it where it is if you are happy with who it's with and their fund offerings.

2. Transfer the Rollover IRA to a new home as a Rollover IRA at a reputable low-cost place like Vanguard, Fidelity, Schwab. The latter two have stepped up their game in recent years to be more competitive with Vanguard in the low cost index funds game. By the way, if you keep the $2200 classified as a "Rollover IRA," I wouldn't contribute new money to it at all because that would commingle new monies and make accounting more difficult in the event you want to move that Rollover IRA into a 403(b) or 401(k) plan in the future. (In other words, if you want to have a traditional IRA, start a new traditional IRA but keep the rollover IRA untouched.)

3. At the new place, you could convert it to a Roth IRA, which would be a taxable event on $2200 but may be worth the small hit with your current income and situation. Heck, this could be the start of your Roth IRA anyways!

4. If you like your current company's 403(b) and they accept incoming rollovers from a Rollover IRA, you could just move that $2200 to your current company's 403(b) plan. Less accounts to juggle that way.


Vanguard has a line-up of Target Retirement index funds with only $1000 minimum to start and are "funds of funds" that basically are a bucket of several mutual funds that form a balanced breakfast (total US stock market index, total US bond market index, total international stock, total international bond). For many years, I got by just putting money into a Roth IRA with only the Target Retirement 2050 fund, but recommend reading through all that information and see if there's one that meets your desired retirement year, and it's potentially a "set it and forget it" fund, and you can continue learning the basics in the meantime. [Edit: I'm sure Fidelity and Schwab have a similar line-up of funds that are target-date index funds. With Fidelity, make sure you go with their "index" funds, since they have a similar set of target-date funds that are actively managed and cost a lot more (i.e. have higher expense ratios).]

 

[Stroganoff]

I know this isn't much but I know squat about investments.

No problemo! Everybody starts at zero and has to learn it from scratch. A lot of this stuff (unfortunately) isn't taught in K-12 school or even undergrad, and parental wisdom varies. I'm learning as I go too.

I'll copy-paste some links I've posted before. Bottom line is that a lot of the knowledge is free (or cheap with some books you can buy), and a lot of the basics is pretty do-it-yourself once you know the basics of passive index investing and understand your risk tolerance and goals. I'm a long-term, passive investor for retirement at this point. I'm not a day-trader, and as fun as it is to learn technical analysis and hallucinate at charts and patterns, that's not really what passive index investing is all about. No need to cherry-pick individual stocks too, when mutual funds known as index funds have built in diversification and follow their index, no more, no less. It's a very low-stress, low-emotion type of relationship with your nest egg. There's way too many wolves out there that want a slice of your money, and if you pay any attention to financial rags and things like CNBC or Cramer or whatever, it's one big Chicken Little drama fest.

Some free suggestions:

1. The White Coat Investor: Blog/Website - From an SDN native and partner! Devour this and read until you've read everything. There's both generic articles that apply to everyone as well as articles that apply specifically to health care professionals, especially physicians.
2. Bogleheads Wiki and forums - Such a wealth of free knowledge and information. Maybe start with the "Getting Started" wiki article. Learn all about the value of passive investing to reduce costs and know how to diversify properly and how to manage income, taxes, and wealth properly. Many people in the forums are older and wise and very kind. And many are worth well north of $10M. Learn from them.
3. (Note, this link is a PDF) - If You Can: How Millennials Can Get Rich Slowly by Bill Bernstein, MD, PhD - a short, free, 16-page e-book that provides casual wisdom to those in their 20s and 30s. Dr. Bernstein is a finance author and guru and retired physician and also a "Boglehead" who subscribes to Boglehead wisdom.

I might even recommend #3 first since it's free and the link is right there.

Also some book lists of popular finance/investing books for deeper dives into individual topics and philosophy:

• Investment Books
• Books: recommendations and reviews - Bogleheads

Additionally (and not listed in the links above), I personally liked The Millionaire Next Door by Thomas Stanley and William Danko. Surveyed and analyzed the habits of self-made millionaires. Spoiler: They found that physicians, in general, were at the top of the chart of high-income earners who, for various reasons they discuss, don't save as aggressively as they should and spend, spend, spend more relative to other high-earning occupations.

 

[tartesos]

No problemo! Everybody starts at zero and has to learn it from scratch. A lot of this stuff (unfortunately) isn't taught in K-12 school or even undergrad, and parental wisdom varies. I'm learning as I go too.

I'll copy-paste some links I've posted before. Bottom line is that a lot of the knowledge is free (or cheap with some books you can buy), and a lot of the basics is pretty do-it-yourself once you know the basics of passive index investing and understand your risk tolerance and goals. I'm a long-term, passive investor for retirement at this point. I'm not a day-trader, and as fun as it is to learn technical analysis and hallucinate at charts and patterns, that's not really what passive index investing is all about. No need to cherry-pick individual stocks too, when mutual funds known as index funds have built in diversification and follow their index, no more, no less. It's a very low-stress, low-emotion type of relationship with your nest egg. There's way too many wolves out there that want a slice of your money, and if you pay any attention to financial rags and things like CNBC or Cramer or whatever, it's one big Chicken Little drama fest.

Some free suggestions:

1. The White Coat Investor: Blog/Website - From an SDN native and partner! Devour this and read until you've read everything. There's both generic articles that apply to everyone as well as articles that apply specifically to health care professionals, especially physicians.
2. Bogleheads Wiki and forums - Such a wealth of free knowledge and information. Maybe start with the "Getting Started" wiki article. Learn all about the value of passive investing to reduce costs and know how to diversify properly and how to manage income, taxes, and wealth properly. Many people in the forums are older and wise and very kind. And many are worth well north of $10M. Learn from them.
3. (Note, this link is a PDF) - If You Can: How Millennials Can Get Rich Slowly by Bill Bernstein, MD, PhD - a short, free, 16-page e-book that provides casual wisdom to those in their 20s and 30s. Dr. Bernstein is a finance author and guru and retired physician and also a "Boglehead" who subscribes to Boglehead wisdom.

I might even recommend #3 first since it's free and the link is right there.

Also some book lists of popular finance/investing books for deeper dives into individual topics and philosophy:

• Investment Books
• Books: recommendations and reviews - Bogleheads

Additionally (and not listed in the links above), I personally liked The Millionaire Next Door by Thomas Stanley and William Danko. Surveyed and analyzed the habits of self-made millionaires. Spoiler: They found that physicians, in general, were at the top of the chart of high-income earners who, for various reasons they discuss, don't save as aggressively as they should and spend, spend, spend more relative to other high-earning occupations.

Physicians are usually under accumulators of wealth due to keeping with the Joneses and starting earning late. Loved that book!( the millionaire next door).

 

[The White Coat Investor]

What does your written financial say about how your long term savings should be invested?

Investing Plans for Doctors | White Coat Investor

How do you reach financial goals while taking the least possible amount of risk? By implementing an Investment Plan. Here's why and how to get it done.

www.whitecoatinvestor.com

 

[Womb Raider]

Wrong post

 

[redfish955]

1st-max a roth ira. You can withdraw the money you put in at any time but not the interest on it.
2nd-start living on a students budget and save. I would try to set a budget of $20k after taxes which is about a $30k salary. Get that cheap studio, quit eating out, get cheaper groceries but still eat healthy.
3rd-Look up the median income where you want to live. If you are earning below this number it will be hard to find housing as a lab tech.
4th-if you remain as a lab tech remain on a students budget for the next 8 years and this will set your finances for life.

 

[The White Coat Investor]

Invest in yourself, i.e. your ability to have a higher income later. Like professional school tuition.