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Hi all,

I originally posted this in the newbie forum, and received some advice regarding brokers and buying a house or not; I'd like to get some feedback on the other portions of what I was looking at, however. Any help would be appreciated. Thanks.


I was a member on here waaay back, but never ended up getting very serious about my investing. That was a number of years ago, and now a lot has changed.

In a couple months I'll be 30. I've got a fiancee (open-ended on when we'll get married right now), and I make a very good salary doing something I love (I'm an Associate Producer at a video game company), and I recently got a new job and a raise with it.

So, I find myself with a surplus of money... the kind of problem everyone wants! My credit cards are paid off, and have been for a while. I have some reserves of cash right now, as well as some minor investments at Smith Barney that were given to me by a relative.

I have a 401k that has rolled over from my previous two jobs, and I'll be actively contributing to that again at the start of next month when I'm eligible to join the 401k at my new job here. We have a match of 4% for the first 5% I contribute, so I'll at least be doing that much.

Here's my current plan, and then my questions:

1) Make sure my 3-6 months money is socked away. I opened an account with Emigrant Direct yesterday, and I'll be putting my liquid funds into that. I have a decent amount of money for this fund right now, but upon closer examination, it's probably only about 2 months of expenses at my current burn rate. It'd go about 4 months if I went on austerity. I plan to build this amount over time concurrently with my other savings goals.

2) Decide what brokerage to go with. A good friend who is meticulous in his research recommended Scottrade to me. I also have an FMA account at Smith Barney that I can use.

3) Open a Roth IRA.

4) Determine what my priorities are for contributing to the 401k, the IRA, my liquid funds, and whatever else.

OK, here are my questions...

- I am leaning heavily away from using my FMA account and Smith Barney as a brokerage. Regardless of the relative merits of full service vs. discount, I just can't bring myself to trust that they are going to look after me properly... and since the point of a full-service broker is to give you some peace of mind, that seems self-defeating. The question is, is there any good reason to leave the FMA account open? From what I see, I can get most or all of what it offers on my own from other sources.

- I'm looking at opening the Roth IRA in addition to my 401k primarily because I can withdraw the principal to use for a down payment on a house, which is something I would like to do some time in the next 2-5 years. If I am maxing my Roth contributions (a possibility), I will start working towards the down payment in my liquid funds so I don't end up touching the Roth money. The question is, is this a sound approach?

- My biggest question is, what should my priorities be for how I now invest into my various options, and is it Foolish for me to now open a regular brokerage account and invest in that?

Right now, as best I can figure my priorities, they are to:
1) get all of my 401k matching
2) build my liquid funds to where I eventually want them
3) invest in the Roth IRA to max contribution.

If there's anything left after that, I guess I would put more into my 401k, or alternately open a non-retirement account and invest there.

- Right now my FMA has a couple thousand dollars in investments in it, which I'll almost certainly want to put to work elsewhere if I don't use Smith Barney. I need to figure out what to do with that. I'm guessing that it should be applied in order to my investing priorities, once they're worked out.

I think that about covers it. I'm also looking for a reality check - are my assumptions sound here?


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