Author Topic: Lump of cash, uncertain plans--what would you do?  (Read 887 times)

La Bibliotecaria Feroz

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Lump of cash, uncertain plans--what would you do?
« on: May 01, 2018, 07:19:38 PM »
I am very active in the journals but I think this is my first time posting here. I haven't previously had enough money to worry about investing beyond VTSAX.

Here's a little snapshot of my situation.
Rollover IRA $25K (I think I'm about to get another $15K infusion from my divorce settlement)
Roth IRA $3400
HSA $2600

Income in the low 50s
8% of my pay plus an 11% employer match goes into a local government employee defined benefit contribution plan. I also contribute about $100 a month to my HSA, but am not currently contributing to my other accounts. (My housing costs are about to go down when I move in with my fiance, so hopefully I'll be able to ramp up savings.)
Engaged--my fiance's income is similar to mine but he has a lot more retirement savings from his last job

I have about $30,000 sitting in my Ally savings account (1.5% APY), about $5K of which is emergency fund, travel savings, etc. and about $25K is my share of the equity from the sale of the marital home from my first marriage.

I have 2 school-age children. To begin with, my fiance and I are renting an apartment. We live in the HCOL of Denver but are frugal enough to realistically buy a house if we want to. This could be as soon as next year or further in the future--or never. So the $25K might be a house down payment as soon as next year... or not.

So what should I do with it? Leave it in Ally? Get a slightly better online savings account? Put maybe half of it into a bond fund? (I don't know anything about bond funds or where to begin with them.) Something else?

Please let me know if there's other info I should include.

cchrissyy

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Re: Lump of cash, uncertain plans--what would you do?
« Reply #1 on: May 01, 2018, 07:58:44 PM »
1st thing I'd do is send a full 5500 to my 2018 IRA.

I'd keep 5k aside as emergency fund like you said.

As far as the other 20k, I understand keeping down payment money out of the market but honestly my "maybe" down payment money would go all-in.

Carrie

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Re: Lump of cash, uncertain plans--what would you do?
« Reply #2 on: May 01, 2018, 08:12:26 PM »
I would keep it as is for another year or two until you guys are married and know better about your housing future.

Radagast

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Re: Lump of cash, uncertain plans--what would you do?
« Reply #3 on: May 01, 2018, 08:22:52 PM »
1st thing I'd do is send a full 5500 to my 2018 IRA.

I'd keep 5k aside as emergency fund like you said.
This. And, I assume you already have a Vanguard account in taxable space? If you don't have one you should be able to open one easily. From there if nothing else a tax exempt bond fund (short term tax exempt, limited term tax exempt, or intermediate term tax exempt) should be relatively stable and have a higher return than Ally even before taxes. Lots of other choices too. At a 1% difference and 25k you are looking at only a $250 gain a year to switch to bonds. Still, by doing this you'll have more money and less effort for the next time you need a productive place to put money.

ChpBstrd

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Re: Lump of cash, uncertain plans--what would you do?
« Reply #4 on: May 01, 2018, 08:27:42 PM »
I would put off a home purchase for at least a couple of years, and fully invest the entire balance in a tax-advantaged account like a Roth, as mentioned.

1) Denver housing is obnoxiously expensive. Have you done a rent vs. buy calculation?
2) You are just getting married and will have enough stress and adjustments to make without the burden of a home purchase and all that debt.

La Bibliotecaria Feroz

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Re: Lump of cash, uncertain plans--what would you do?
« Reply #5 on: May 10, 2018, 09:18:30 PM »
Got distracted by other things (my flaky ex says he is moving to Florida, which may or may not be true and would cause havoc with my domestic arrangements--good times).

Anyway, I did go on and fully fund my Roth. Woot! Impulse investing!

For now, I am keeping the rest in cash. My fiance's car is at 180K and I think combined we have more like a 1-2 month emergency fund than 3-6, so I may have use for the cash even if we do not immediately buy.






I would put off a home purchase for at least a couple of years, and fully invest the entire balance in a tax-advantaged account like a Roth, as mentioned.

1) Denver housing is obnoxiously expensive. Have you done a rent vs. buy calculation?
2) You are just getting married and will have enough stress and adjustments to make without the burden of a home purchase and all that debt.

I haven't, but I will when it gets closer.

I don't want to wait too long because we're living on the wrong side of town from our jobs, and also an area that we just don't like that much. My kids go to school over here. We'd like to move parts of town and it would be fine to change their school--ONCE. I don't think I should move them unless we are buying a house. Otherwise, we would be limiting our house-buying radius to "near their school." My kids have been jerked around a lot.

Thanks for the advice, guys. Good problem to have :-).