How should I choose an additional retirement investment plan?
"It's a hard decision to make. Especially without knowing the complete contract details. I would in general stay away from financial ""advisors"" like tecis or other pyramid selling companies (""Strukturvertriebe"" in german). They usually only offer a very limited range of products. In most cases they sell only 1 or 2 products and tell everyone that these offers are the best and fit exactly to the client. I would prefer an insurance broker (requires an education) which could in theory offer any product. Coming to your situation: If you already have a Riester product which is maxed out, I see no point in another private insurance without any aid. The insurance construction allows you to save some taxes but it does cost you a premium. I would buy the funds (preferable ETFs) on my own. This comes down to the question: Does the insurance construction payoff for you for the costs it generates?"
So, first -- good job on making a thorough checklist of things to look into. And onto your questions -- is this a worthwhile process? Even independent of specific investing goals, learning how to research is valuable. If you decided to forgo investing in stocks directly, and chose to only invest in index funds, the same type of research skills would be useful. (Not to mention that such discipline would come in handy in other fields as well.) What other 80/20 'low hanging fruit' knowledge have I missed? While it may not count as 'low hanging fruit', one thing that stands out to me is there's no mention of what competition a company has in its field. For example, a company may be doing well today, but you may see signs that it's consistently losing ground to its competition. While that alone may not dissuade you from investing, it may give you something to consider.  Is what I've got so far any good? or am I totally missing the point. Your cheat sheet seems pretty good to me. But a lot depends on what your goals are. If you're doing this solely for your education and experience, I would say you've done well. If you're looking to invest in a company that is involved in a field you're passionate about, you're on the right track. But you should probably consider expanding your cheat sheet to include things that are not 'low hanging fruit' but still matter to you.  However, I'd echo the comments that have already been made and suggest that if this is for retirement investments, take the skills you've developed in creating your cheat sheet and apply that work towards finding a set of index funds that meet your criteria.  Otherwise happy hunting! Don't over think about your choices. The most important thing to start now and keep adjusting and tuning your portfolio as you move along in your life. Each individual's situation is unique. Start with something simple and straight forward, like 100 - your age, in Total Stock market Index fund and the remaining total bond market index fund. For your 401k, at least contribute so much as to get the maximum employer match. Its always good if you can contribute the yearly maximum in your 401k or IRA. Once you have built up a substantial amount of assets (~ $50k+) then its time to think more about asset allocation and start buying into more specific investments as needed. Remember to keep your investment expenses low by using index funds. Also remember to factor in tax implications on your investment decisions. eg. buying an REIT fund in a tax advantaged account like 40k is more tax efficient than buying it in a normal brokerage account. "There are a lot of funds that exist only to feed people's belief that existing funds are not diversified or specialized enough.  That's why you have so many options. Just choose the ones with the lowest fees. I'd suggest the following: I wouldn't mess around with funds that try and specialize in ""value"" or those target date funds. If you really don't want to think and don't mind paying slightly higher fees, just pick the target date fund that corresponds to when you will retire and put all your money there. On the traditional/Roth question, if your tax bracket will be higher when you retire than it is now (unlikely), choose Roth.  Otherwise choose traditional." the whole room basically jumped on me I really have an issue with this. Someone providing advice should offer data, and guidance. Not bully you or attack you.  You offer 3 choices. And I see intelligent answers advising you against #1. But I don't believe these are the only choices. My 401(k) has an S&P fund, a short term bond fund, and about 8 other choices including foreign, small cap, etc. I may be mistaken, but I thought regulations forced more choices. From the 2 choices, S&P and short term bond, I can create a stock bond mix to my liking. With respect to the 2 answers here, I agree, 100% might not be wise, but 50% stock may be too little. Moving to such a conservative mix too young, and you'll see lower returns.  I like your plan to shift more conservative as you approach retirement.   Edit - in response to the disclosure of the fees -  1.18% for Aggressive, .96% for Moderate I wrote an article 5 years back, Are you 401(k)o'ed in which I discuss the level of fees that result in my suggestion to not deposit above the match. Clearly, any fee above .90% would quickly erode the average tax benefit one might expect. I also recommend you watch a PBS Frontline episode titled The Retirement Gamble It makes the point as well as I can, if not better.  The benefit of a 401(k) aside from the match (which you should never pass up) is the ability to take advantage of the difference in your marginal tax rate at retirement vs when earned. For the typical taxpayer, this means working and taking those deposits at the 25% bracket, and in retirement, withdrawing at 15%. When you invest in a fund with a fee above 1%, you can see it will wipe out the difference over time. An investor can pay .05% for the VOO ETF, paying as much over an investing lifetime, say 50 years, as you will pay in just over 2 years.  They jumped on you? People pushing funds with these fees should be in jail, not offering financial advice. Mostly you nailed it.  It's a good question, and the points you raise are excellent and comprise good analysis. Probably the biggest drawback is if you don't agree with the asset allocation strategy.  It may be too much/too little into stocks/bonds/international/cash.   I am kind of in this boat.  My 401K offers very little choices in funds, but offers Vanguard target funds.  These tend to be a bit too conservative for my taste, so I actually put money in the 2060 target fund.  If I live that long, I will be 94 in 2060.   So if the target funds are a bit too aggressive for you, move down in years.  If they are a bit too conservative, move up. I use the self-directed option for the 457b plan at my job, which basically allows me to invest in any mutual fund or ETF. We get Schwab as a broker, so the commissions are reasonable. Personally, I think it's great, because some of the funds offered by the core plan are limited. Generally, the trustees of your plan are going to limit your investment options, as participants generally make poor investment choices (even within the limited options available in a 401k) and may sue the employer after losing their savings. If I was a decision-maker in this area, there is no way I would ever sign off to allowing employees to mess around with options. Here is a nice overview from Vanguard on some options for a small business owner to offer retirement accounts.   https://investor.vanguard.com/what-we-offer/small-business/compare-plans I would look over the chart and decide which avenue is best for you and then call around to investment companies (Vanguard, Fidelity, etc. etc.) asking for pricing information. Your approach sounds solid to me.  Alternatively, if (as appears to be the case) then you might want to consider devoting your tax-advantaged accounts to tax-inefficient investments, such as REITs and high-yield bond funds.  That way your investments that generate non-capital-gain (i.e. tax-expensive) income are safe from the IRS until retirement (or forever).  And your investments that generate only capital gains income are safe until you sell them (and then they're tax-cheap anyway). Of course, since there aren't really that many tax-expensive investment vehicles (especially not for a young person), you may still have room in your retirement accounts after allocating all the money you feel comfortable putting into REITs and junk bonds.  In that case, the article I linked above ranks investment types by tax-efficiency so you can figure out the next best thing to put into your IRA, then the next, etc. This advice will be too specific, but... With the non-retirement funds, start by paying off the car loan if it's more than ~3% interest rate. The remainder: looks like a good emergency fund. If you don't have one of those yet, you do now. Store it in the best interest-bearing savings account you can find (probably accessible by online banking). If you wish to grow your emergency fund beyond $14-20,000 you might also consider some bonds, to boost your returns and add a little risk (but not nearly as much risk as stocks). With the Roth IRA - first of all, toss the precious metals. Precious metals are a crisis hedge and an advanced speculative instrument, not a beginner's investment strategy for 40% of the portfolio. You're either going to use this money for retirement, or your down payment fund. If it's retirement: you're 28; even with a kid on the way, you can afford to take risks in the retirement portfolio. Put it in either a targe-date fund or a series of index funds with an asset allocation suggested by an asset-allocation-suggestion calculator. You should probably have north of 80% stocks if it's money for retirement. If you're starting a down-payment fund, or want to save for something similar, or if you want to treat the IRA money like it's a down-payment fund, either use one of these Vanguard LifeStrategy funds or something that's structured to do the same sort of thing. I'm throwing Vanguard links at you because they have the funds with the low expense ratios. You can use Vanguard at your discretion if it's all an IRA (and not a 401(k)). Feel free to use an alternative, but watch the expense ratios lest they consume up to half your returns. Your plan sounds quite sound to me.  I think that between the choices of [$800 for Loans, $300 for Retirement] and [$1100 for loans], both are good choices and you aren't going to go wrong either way.   Some of the factors you might want to consider: I like your retirement savings choices - I myself use the admiral version of VOO, plus a slightly specialized but still large ETF that allows me to do a bit of shifting.  Having something that's at least a bit counter-market can be helpful for balancing (so something that will be going up some when the market overall is down some); I wouldn't necessarily do bonds at your age, but international markets are good for that, or a stock ETF that's more stable than the overall market.  If you're using Vanguard, look at the minimums for buying Admiral shares (usually a few grand) and aim to get those if possible, as they have significantly lower fees - though VOO seems to pretty much tie the admiral version (VFIAX) so in that case it may not matter so much. As far as the target retirement funds, you can certainly do those, but I prefer not to; they have somewhat higher (though for Vanguard not crazy high) expense ratios.  Realistically you can do the same yourself quite easily. You need a find a financial planner that will create a plan for you for a fixed fee. They will help you determine the best course of action taking into account the pension, the 403B, and any other sources of income you have, or will have. They will know how to address the risk that you have that that particular pension.  They will help you determine how to invest your money to produce the type of retirement you want, while making sure you are likely to not outlive your portfolio. Set up budget categories.  Earmark your income as it is paid, for your budget categories.  Pay your bills and expenses.  For debts, pay the minimum on everything.  There will be an amount left once everything is budgeted.  That's the 'extra'.  Then focus on, in order of priority, the following: So, when your emergency fund is up to an appropriate level (3-6 months of living expenses as a rule of thumb, adjusted according to your comfort level).   Once you have your emergency fund started, budget at least enough toward your 401k to capture any matching offered by your employer. Then use the snowball plan to pay off your debts.  (From what your post says, this does not apply to you, but you may have some small credit card debts taht were not discussed).  Earmark the 'extra' for the smallest debt first.  When that debt is paid, the 'extra' grows by the minimum payment of the smallest.  Thus the snowball grows as you pay off debts. Once the debts are gone, reward yourself, within reason (and without going into debt). Now shift your extra into fully funding your retirement savings.  Consult a financial advisor to help you plan how to distribute your retirement savings across the available retirement savings types.  They can explain why it's good to have some of your retirement savings funded from after tax income.  They can help you find the balance between pre- and post-tax funded accounts.   Eventually, you may come to the point where you're putting the max allowed into your tax advantaged retirement accounts.  At your age, this is a significant achievement.  Anything left over after retirement savings is funded can be used for whatever you want.  If you choose wealth building, it can lead to financial independence. The first two should be a one time thing.  You can/should do more than one at a time.  The fourth one is optional, and should not be considered until 1 and 2 are completed, and 3 is maxed out. What you achieve is up to you.  Look up FIRE, or Financially independent, retire early.  There are groups of folks striving for this.  They share advice on frugal living and wealth building strategies.  The goal is to save enough capital to live off the passive income of interest and dividends.  Most of them seem to have pre-50 target ages.  At your age and income, you could hit a pre-40 goal.  But it takes commitment and a certain type of personality.  Not for me but it might be for you. My figuring (and I'm not an expert here, but I think this is basic math) is: Let's say you had a windfall of $1000 extra dollars today that you could either: a. Use to pay down your mortgage b. Put into some kind of equity mutual fund Maybe you have 20 years left on your mortgage.  So your return on investment with choice A is whatever your mortgage interest rate is, compounded monthly or daily.  Interest rates are low now, but who knows what they'll be in the future.  On the other hand, you should get more return out of an equity mutual fund investment, so I'd say B is your better choice, except: But that's also the other reason why I favour B over A.  Let's say you lose your job a year from now.  Your bank won't be too lenient with you paying your mortgage, even if you paid it off quicker than originally agreed.  But if that money is in mutual funds, you have access to it, and it buys you time when you really need it.  People might say that you can always get a second mortgage to get the equity out of it, but try getting a second mortgage when you've just lost your job. "That depends, really. Generally speaking, though - Roth IRAs are THE PLACE for Stock-Market/Mutual-Fund investing. All the off the wall (or, not so off the wall) things like Real Estate investments, or buying up gold, or whatever other ideas you hear from people - they may be good or bad or whatnot. But your Roth IRA is maybe not the best place for that sort of thing.  The whole philosophy behind IRAs is to deliberately set aside money for the future. Anything reasonable will work for this. Explore interesting investment ideas with today's money, not tomorrow's money. That being said - at your age I would go for the riskier options within what's available.  If I were in your situation (and I have been, recently), I would lean toward low-fee mutual funds classified as ""Growth"" funds.  My own personal opinion (THIS IS NOT ADVICE) is that Small Cap International funds are the place to be for young folks. That's a generalized opinion based on my feel for the world, but I don't think I'm personally competent to start making specific stock picks. So, mutual funds makes sense to me in that I can select the fund that generally aligns with my sense of things, and assume that their managers will make reasonably sound decisions within that framework. Of course that assumption has to be backed up with reputation of the specific MF company and the comparative performance of the fund relative to other funds in the same sector. As to the generalized question (how else can you work toward financial stability and independence), outside of your Roth IRA: find ways to boost your earning potential over time, and buy a house before the next bubble (within the next 18 months, I'm GUESSING)." "The policy you quoted suggests you deposit 6% minimum. That $6,000 will cost you $4,500 due to the tax effect, yet after the match, you'll have $9,000 in the account. Taxable on withdrawal, but a great boost to the account.  The question of where is less clear. There must be more than the 2 choices you mention. Most plans have 'too many' choices. This segues into my focus on expenses. A few years back, PBS Frontline aired a program titled The Retirement Gamble, in which fund expenses were discussed, with a focus on how an extra 1% in expenses will wipe out an extra 1/3 of your wealth in a 40 year period. Very simple to illustrate this - go to a calculator and enter .99 raised to the power of 40. .669 is the result. My 401(k) has an expense of .02% (that's 1/50 of 1%) .9998 raised to the same 40 gives .992, in other words, a cost of .8% over the full 40 years. My wife and I are just retired, and will have less in expenses for the rest of our lives than the average account cost for just 1 year.  In your situation, the knee-jerk reaction is to tell you to maximize the 401(k) deposit at the current (2016) $18,000. That might be appropriate, but I'd suggest you look at the expense of the S&P index (sometime called Large Cap Fund, but see the prospectus) and if it's costing much more than .75%/yr, I'd go with an IRA (Roth, if you can't deduct the traditional IRA). Much of the value of the 401(k) beyond the match is the tax differential, i.e. depositing while in the 25% bracket, but withdrawing the funds at retirement, hopefully at 15%. It doesn't take long for the extra expense and the ""holy cow, my 401(k) just turned decades of dividends and long term cap gains into ordinary income"" effect to take over. Understand this now, not 30 years hence.  Last - to answer your question, 'how much'? I often recommend what may seem a cliche ""continue to live like a student."" Half the country lives on $54K or less. There's certainly a wide gray area, but in general, a person starting out will choose one of 2 paths, living just at, or even above his means, or living way below, and saving, say, 30-40% off the top. Even 30% doesn't hit the extreme saver level. If you do this, you'll find that if/when you get married, buy a house, have kids, etc. you'll still be able to save a reasonable percent of your income toward retirement.  In response to your comment, what counts as retirement savings? There's a concept used as part of the budgeting process known as the envelope system. For those who have an income where there's little discretionary money left over each month, the method of putting money aside into small buckets is a great idea. In your case, say you take me up on the 30-40% challenge. 15% of it goes to a hard and fast retirement account. The rest, to savings, according to the general order of emergency fund, 6-12 months expenses, to cover a job loss, another fund for random expenses, such as new transmission (I've never needed one, but I hear they are expensive), and then the bucket towards house down payment. Keep in mind, I have no idea where you live or what a reasonable house would cost. Regardless, a 20-25% downpayment on even a $250K house is $60K. That will take some time to save up. If the housing in your area is more, bump it accordingly.  If the savings starts to grow beyond any short term needs, it gets invested towards the long term, and is treated as ""retirement"" money. There is no such thing as Saving too much. When I turned 50 and was let go from a 30 year job, I wasn't unhappy that I saved too much and could call it quits that day. Had I been saving just right, I'd have been 10 years shy of my target."