The 401(k) 15 Percent Investment Challenge
In the interest of supercharging my retirement investing, to get back on track after falling off the proverbial bandwagon last year, I have officially begun the 401(k) 15% investment challenge.
In August I should receive my annual performance bonus and (hopefully) merit pay increase. I plan to use the bonus to pay off my credit card debt, my wife's credit card debt, and use the rest to begin an emergency cash savings fund. After these items, I will have only four major expenses: rent, my student loan payment, my auto loan payment, and my auto insurance payment.
Once the credit card debt is paid off with my bonus, I have made it my goal to contribute 15% of my salary to my 401(k) retirement plan. With the company matching contribution of 4%, this would result in an annual contribution of approximately $16,150. This amount is just shy of the annual 401(k) contribution limit. My hope is that the 15% contribution is sustainable; it should be stable according to my calculations.
Since I will already be 32 years old this summer, I need to take full advantage of the opportunity for investing a large percentage of my income while I am still youngish and while my earning potential is still great.
For additional investments beyond the 15% 401(k) contribution, I plan to invest in either a diversified portfolio of individual stocks or a portfolio of ETFs inside a Roth IRA. I am not sure how much additional income I could devote to investing, given the 401(k) 15% commitment, but I hope to push the investment envelope further once my smaller debts are eliminated.
