Saving in Mutal Funds

Well, it's official...I have finally opened up a few mutual funds to begin saving for retirement (early retirement). You have probably read my previous posts about saving for retirement and are wondering why I'm saving more than before. My plan is to hopefully be able to retire my the time my husband and I are 50. This plan is a huge undertaking and I am trying to take all the steps necessary to prepare for this. One thing that I have thought of is how we will access our retirement funds at that age. You see, if we with drawl from our TSP or traditional IRA that early, we would be penalized and taxed. We could with drawl from our Roth that early, but only the contributions (if you with drawl the earnings early you could be penalized/taxed) and I am hoping by that age most of our retirement fund will be earnings, not contributions.

So this left me in a quandary, trying to decide what was the best way to save for "early retirement." Now, I have been saving a small amount each month for what I like to call our "getting out of the military" fund because I know that when my husband retires we will have added expenses. I finally decided to turn this small fund into our "early retirement" fund. Previously, I simply had this fund in the bank and just put it into whatever account produced the most interest, but this really isn't getting us anywhere. This is where the mutual funds come into play.

I listen to Dave Ramsay and have read many of his books. So I finally decided to take his advice and open up some mutual funds. I chose four funds offered by our insurance carrier (I decided to go with them because we already use them for insurance, loans, etc and trust them) with varying degrees of aggressiveness. Prior to establishing the funds, I called USAA and spoke to their financial advisers and read all the information that I could find our their website. I checked each funds history and choose top rated funds, with good long term track records. I didn't have enough money to establish each fund with a single deposit, so I signed up for USAA's automatic deposit program. I was able to establish each fund and choose the amount I wanted to be deposited each month (ranging from a minimum of $20-$50/month), that way I didn't have to wait until I had $12,000 saved up to set all four funds.

I must admit that I am quite nervous about investing; I tend to be more conservative with my money. Despite this, I know that if I continue to receive only 3-6% interest at the bank, I will barely stay above inflation. These are the steps I know I must take, if I really do want to retire early.