Here are more tips for ’06 from Suze Orman, continuing a short series.
Go for a Roth IRA.
Fund your Roth IRA to the maximum of $4,000 (or $5,000 if you’re over 50 years old) if possible and if you qualify. Suze suggests paying off credit card debt first, and I agree. Also, fund your 401(k) at least to the level where you’ll receive the full company match possible first.
Dump Expensive Funds.
[The fund's expense ratio is] something every fund charges you, but it’s easy to miss because it doesn’t show up on your statements as a line-item fee. Instead it’s subtracted from your fund’s performance behind the scenes. The return you see on your statement is after the expense ratio has been deducted from the fund’s gross return. The average expense ratio for managed stock funds is 1.5 percent.
Suze suggests finding funds with expense ratios of 0.2 or less, which would mean index funds or ETFs. My TIAA-Cref index fund, TCEIX, has an expense ratio of 0.26%. I’ll consider switching the account to Vanguard depending on the amount I’d pay for any taxes and fees for sellng the investment.
More to follow…
Updated February 7, 2012 and originally published December 19, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.