I last updated you on my retirement accounts and their balances at end of 2013 so I figured with it now being almost the middle of the year, this would be the perfect time to update you on the progress I had made since then. I’m hoping that when all my debt is finally paid off and I have a sizable amount saved up this can be become a monthly occurrence, but for now I will stick to these twice a year updates. There’s really not that much movement with these accounts, as this is mostly a set it and forget method of investing in index funds. There’s no point in panicking over the ebbs and flows of the market when this is most likely a 20-30 year journey of hopefully riding the curve to a higher point than I started at.
At the end of 2013, I had made significant progress and my retirement savings broke the 5-figure mark which was a pretty huge accomplishment for me. I started my job out of college with basically zero knowledge of what a 401k, IRA, or pension really was and through my desire to learn more about where exactly my money was going has lead me to where I am today. Here is what my accounts did look like at the end of 2013 though:
I managed to “save” up $15,000 over a year and a half of working, not bad at all in my book. My company matches half of what you contribute, up to 3% of your salary. I started out with a 4% contribution and got a match of 2% and then later on realized I was missing out on free money so I increased my contribution to 6% to get the full 3% match. When I got a raise, I increased my contribution to 8% and while many would agree that it was a poor decision when actively paying down high interest debt, it ended up working out for me. I think I ended up the year up 18% because of how crazy the market went last year, which far surpassed the interest rates on my student loans.
So if we now fast forward 6 months, I have continued with the same strategy and this is how my accounts look as well as the amount they have changed:
I once again maxed my contribution to my Roth IRA at $5,500 which is why you see such a huge increase there. It’s a shame that they didn’t increase the contribution limit for this year, but it is what it is. Hopefully next year the contribution limit will be higher! The market has leveled off somewhat so the increases from that are minimal so far this year.
My work also offers a pension that is 3% of your salary, so I essentially get two “free raises” of 3% with my pension and with my 401k which are pretty good perks. I know that a lot of companies have given up on pensions so it’s another little bonus which I can appreciate. It’s awesome knowing that I’ve now hit $25,000 in savings in just two years at my job. I’m hoping to see the effects of compound interest start to take over with a little help from the market as my portfolio expands.
I’d also like to note that my both my Roth IRA and 401k are fully invested within index funds, or more exactly in funds composed of index funds. For my Roth IRA I use Vanguard and since my balance isn’t that large yet I’m using a simple Vanguard Target Retirement Fund. For my 401k I’m using the same sort of thing but with Charles Schwab, as this had the lowest expense ratio of the options in my 401k so I was lucky to have an option like that – I know some companies don’t offer low-cost funds. My pension offers a small amount of guaranteed interest based on federal interest rates.
I don’t see the next six months being as successful as these past six months, as this included a $5,500 contribution to my Roth IRA but I’m hoping to stay on the positive side of things for the rest of the year!