Last night was retirement investment and college savings lessons at FPU. The take away nugget was once you're on baby step 4, put 15% of gross income in 401(k) and Roth IRAs. You start with the 401(k) up to your company's match, then you max out your Roth IRA up to $5,000 per year then, if you still have more money to invest, you go back and put as much into your 401(k) to get up to 15%. He explained his mix of mutual fund types he invests in, International funds 25%, Small Cap funds 25%, Growth funds 25% and Large Cap funds 25%. He does not invest in single stocks, bonds, CDs or annuities.
As for college savings, he recommends an Educational Savings Account (ESA). You can contribute $2000 per year in it and if you start saving from the time your child is born and get a 12% return, you'll have plenty of money to send jr. off to college when he or she turns 18. He goes on to say that 529 plans can be hit or miss as a vehicle for savings and if you go that route you should make sure to have control over where the investments go within the plan. This seems to be best suited for folks who are sending their kids to out of state schools, expensive ivy league schools and graduate, law or post-doctoral education. I'm all about paying for college but if my kids want to get more degrees than I have, they're on their own.
All in all, I feel totally excited to start investing. I'm glad GJS and I have kept putting money towards our 401(k)s even though we're on baby step 2, I think it will pan out in the long run. We both get a match from our jobs and it is hard to miss the money you never see.