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Originally Posted by imjoshsizemore
Maybe I should put the max I can ($1800ish) into Roth this year and the max (3.3k) next year, and then just not put anything in for the next 2-3 years after that because I will be under 100% fellowship (unearned income)? Does that make sense? And then use extra $$ to pay off my 11k loan that is accruing interest...
i like this plan as long as the vig isn't running on your 11k loan.
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What % interest can I expect to get on the "non-qualified" account? Would that be better than 3% ROI typically, or do you recommend I pay off the 5k loan at 3% interest in that case, after paying off the 11k at 5.5% obviously.
it's impossible to say since no one can predict the future, but i've seen people quote numbers of 7-9% for a well-diversified portfolio. however those numbers are for the long term and include significant risk due to significant exposure to the stock market. this is one reason why paying off the 5.5% loan immediately makes more sense than investing that money.
when you get to the 3% loan, re-evaluate. your life/salary situation will undoubtedly be different, the economy will be different, tax law may be different, etc. one strategy i've seen is to treat the 3% loan like a "reverse bond", so that instead of, say, 20% of your portfolio in bonds, you'd allocate 20% of your portfolio towards paying down this loan. i don't know enough about this strategy to actually recommend it, but it's something you might investigate in time.
hth.