We are 35 and 32 and have a 5 year old and 1 year old. We have zero debt. Paid off cars and home. What should we focus on or do next? Invest more cash even though market is at all time highs?
Roth accounts: $82,000 (VTSAX & some VTIAX)
Brokerage account: $9,000
M1 Finance: $600
Cash: $75,000
529 plans : $1,200 (total)
Income is $6,000 a month total for both of us.
Thanks for the help!
Welcome! Congrats on being debt free. That is a great basis for working towards financial independence. The other two key factors to master are keeping your spending under control and investing. You don’t say what your monthly expenses are, but I am going to assume you have margin and are saving each month as you have managed to achieve what you have so far. So the last step between you and a successful path to FI is investing. Let’s see if we can get you in the right mindset for that.
First, the stock market grows by nature over time, which means that it spends more time than not at record highs. It is like plotting your kid’s weight every day. There would definitely be fluctuations, maybe even big fluctuations if she were to unfortunately fall sick, but the general trend like is upward.
If you weighed your kid and saw she was at a record high would you assume that tend would continue or that she was definitely going to lose weight in the future?
The other thing to consider is that you are investing for the long term. The LONG term. As in the next 50 years or so, luck be with you. So even if we see a correction that takes several years to recover from, that is just a blip in the long term path. Most important is to cultivate a discipline of investing early and often. “Time in the market, not market timing” is a classic phrase you will see around here. You don’t have a crystal ball and neither does anyone else, no matter what you read on finance sites.
So, get that cash invested! You probably don’t need to retain too much as an emergency fund as your debts are already paid off. Decide on a target asset allocation. The Bogleheads lazy portfolios are a great place to start. Your combo of VTSAX and VTIAX is great; we do that in a 60/40 ratio for our stocks.
This is less relevant to you now that you have most of your ducks in a row, but read it anyway to educate yourself;
https://forum.mrmoneymustache.com/investor-alley/investment-order/