Author Topic: 26 need direction on where to invest excess money  (Read 531 times)

demogorgon

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26 need direction on where to invest excess money
« on: February 01, 2019, 02:01:56 PM »
My wife and I are both 26. We have three young children. We do not have any debt. Just over 50K in savings. We will have around $30,000 to invest annually after contributing to employee 401k (to get matching) and funding 5k into an hsa account.

Where do I put a portion of the 50k sitting in savings gaining me nothing?

Where should I invest 30k/year?

My current thoughts:

Roth                       $6k
Roth                       $6k
College savings       $6,750
General investing    $11,250

Any advice is welcomed.

ysette9

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Re: 26 need direction on where to invest excess money
« Reply #1 on: February 01, 2019, 04:10:36 PM »
Take a look at this and then let us know what specific questions you have.

https://forum.mrmoneymustache.com/investor-alley/investment-order/

BicycleB

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Re: 26 need direction on where to invest excess money
« Reply #2 on: February 05, 2019, 11:35:26 AM »

Where do I put a portion of the 50k sitting in savings gaining me nothing?


One option is VASGX, a Vanguard "balanced" fund. I offer the idea as a starting point for your research. Balanced fund means it sets a certain ratio of asset allocation, in this case 80% stock and 20% bonds, then roughly sticks to it. This particular fund also diversifies itself by investing a portion of the stock into international stocks rather than US ones, which in theory delivers more stability with roughly equal long term returns. The expense ratio of .14% is reasonable. It's not the cheapest option you can find, but gives a nice combination of balance and aggressiveness. Since you're young and making early-stage investment, this combination seems like it fits your current position. In one stroke, it covers most of your needs. 45k in VASGX and 5k in bank savings is something I'd be tempted to do because it's the same as 36k stock, 9k bonds, 5k cash and that sounds reasonable to me, but you need to decide your own comfort level.

Other alternatives include a Vanguard Target Date (Target Retirement) fund, which adjusts asset allocation over time to be aggressive at first and more conservative when the target date approaches. Or choose your own fund(s) to personally get a particular focus of investment that you desire. VTSMX buys you the entire US stock market, for example; VTIAX, an index of international non-US stocks; you could get 30k VTSMX, 10k VTIAX, 5k in a bond fund, 5k bank savings.  VTWSX roughly indexes the entire global stock market; you could boldly and simply get 40k VTWSX, 10k in bank savings (or 5k bond fund such as VBILX, 5k bank savings).

Sorry if this is confusing. Just offering starting points.
« Last Edit: February 05, 2019, 11:38:15 AM by BicycleB »

MrThatsDifferent

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Re: 26 need direction on where to invest excess money
« Reply #3 on: February 05, 2019, 12:25:42 PM »
Great work so far! I think $50k for a family of 5, in a high interest online savings account is quite reasonable. Get one with the best returns and least fees. As for your $30k, yep, what you’ve picked looks good to me, others might help you fine tune but if you’re maxing your tax advantage accounts and setting up your kids, you’re doing all you can do really. The excess into a vanguard account that has the least fees. Read MMM or JL Collins for advice, but keep it simple and manageable. Simplicity is the key and you’ve got that covered so far. Nice.