The Best Way to Invest $15,000

[VladTheImpaler]

Need my fellow Mustachians help here!
I have 15k in a savings account.
What is the best way to invest it?


A) I got a Chase $200 new savings account offer in the mail. (I already did the $300/checking account earlier this year.) So I could open a Chase Savings account, park it there for 3 months and make $200.
According to my math, ~5% ROI.

B) Move $3,700 into my Roth IRA (that I have contributed $1800 this year), to max out contributions for the year ($5500 total). Then use the remaining $11,300 to open Vanguard VTSAX account.

How would you invest 15k?
Thank you

[Cwadda]

We may need a full case study in order to advise the best decision. Given the information you've provided, I'd suggest maxing out your Roth IRA to start.

[studlyrs]

Chase gives you $200 after 90 days but you need to keep the money in there 180 days to fulfill the agreement.

[caffeine]

How about maxing the Roth for 2016 and leave $5500 to max out for 2017. Then the rest into VTSAX taxable account.

[VladTheImpaler]

Chase gives you $200 after 90 days but you need to keep the money in there 180 days to fulfill the agreement.

You are right!
I just double checked.
Thank you so much.

So investing 15k for 6 months and gaining $200 = 2.7% Return on investment.

Anyways, the Chase Savings bonus offer expires 01/17/2017.
I can do better with Index fun right?

[VladTheImpaler]

How about maxing the Roth for 2016 and leave $5500 to max out for 2017. Then the rest into VTSAX taxable account.

So transfer $3700 from Savings account to the Roth IRA asap.
Then transfer $5500 from Savings to Roth IRA on Jan 1st.?

This might be the best advice.
Thanks!!

[Cwadda]

How about maxing the Roth for 2016 and leave $5500 to max out for 2017. Then the rest into VTSAX taxable account.

So transfer $3700 from Savings account to the Roth IRA asap.
Then transfer $5500 from Savings to Roth IRA on Jan 1st.?

This might be the best advice.
Thanks!!

Yes, this works very well. Good luck!

[gp_]

emergency savings, vstax, and a few bitcoin (seriously).

[terran]

Chase gives you $200 after 90 days but you need to keep the money in there 180 days to fulfill the agreement.

You are right!
I just double checked.
Thank you so much.

So investing 15k for 6 months and gaining $200 = 2.7% Return on investment.

Anyways, the Chase Savings bonus offer expires 01/17/2017.
I can do better with Index fun right?

The version of this that I did required the $15k for 90 days, and that the account remain open for 6 months, and to avoid fees a $300 minimum balance was required, so the ROI would be closer to your first estimate.

On average an index fund will return more. Whether or not the next 6 months is average is anyone's guess.

Is this $15k you have above whatever emergency fund amount you are comfortable with?

[VladTheImpaler]

The version of this that I did required the $15k for 90 days, and that the account remain open for 6 months, and to avoid fees a $300 minimum balance was required, so the ROI would be closer to your first estimate.

On average an index fund will return more. Whether or not the next 6 months is average is anyone's guess.

Is this $15k you have above whatever emergency fund amount you are comfortable with?

Yes, you right! It's the same deal you did.
Yeah I have separate emergency fund. Also have Roth IRA and a couple other accounts.
But this 15k just sitting in savings account right now.
Bitcoin sound risky!

[caffeine]

Bitcoin is a currency. It isn't meant for an investment vehicle. The importance of Bitcoin comes from a currency free from government regulation. It allows sellers/buyers to make transactions without concern of currency exchange rates.

Early adopters of Bitcoin may have seen a huge growth in capital simply because the exchange rate of established currency to bitcoin was so small. Now that Bitcoin has been around, the exchange rate has stabilized.

It may not be a bad idea to have a small rainy day fund in it (for the case of government collapse or absolute corruption), but Bitcoin isn't going to help you grow wealth.

[Mustacean]

How about maxing the Roth for 2016 and leave $5500 to max out for 2017. Then the rest into VTSAX taxable account.

So transfer $3700 from Savings account to the Roth IRA asap.
Then transfer $5500 from Savings to Roth IRA on Jan 1st.?

This might be the best advice.
Thanks!!

Are you eligible for a HSA? If so, set aside $3400 for living expenses and dump all of your paycheck starting in January into an HSA until you meet the contribution limit so you can take advantage of yet another tax break.

[Socmonkey]

If the US government collapsed, you can't eat bitcoins.

Venezuelans are loving bitcoin right now. At least the smarter ones are.

The whole "you can't eat it" when talking about investments is dumb. Can you eat your 401k? Can you eat your rental property? Can you eat dollar bills? (well I guess you could, but it won't do you any good)

Taking that statement to its logical conclusion you should only invest in dried foods.

[VladTheImpaler]

If the US government collapsed, you can't eat bitcoins.

Venezuelans are loving bitcoin right now. At least the smarter ones are.

The whole "you can't eat it" when talking about investments is dumb. Can you eat your 401k? Can you eat your rental property? Can you eat dollar bills? (well I guess you could, but it won't do you any good)

Taking that statement to its logical conclusion you should only invest in dried foods.

Not even close.  Where did I say that you should only invest in food?

So which is it, is bitcoin an investment like a 401k?  Or is it a hedge against the US Government collapsing?  If it's an investment, it seems pretty speculative to me and a worse option than the 401k / houses you own.  If you think the government might collapse, guns, ammo, and food are better options.

You got a point.

[gp_]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

So which is it, is bitcoin an investment like a 401k?  Or is it a hedge against the US Government collapsing?  If it's an investment, it seems pretty speculative to me and a worse option than the 401k / houses you own.  If you think the government might collapse, guns, ammo, and food are better options.

the average person doesn't know what bitcoin really is, how it works, or why it's even important. in turn, the average person looks at it like a scam, bad investment, etc., and will never own them until one day they'll wish they did 5 years earlier... depending who you talk to, a house, 401k, PM's, investing in the stock market are all risky/bad investments. each sector has been proven time and again to be manipulated at some point, with prices crashing.
 
again, the average person does not understand how bitcoin works, or will take the time to understand... i've made more from bitcoin in 3 years than i have from my 401k and an IRA over 10 years.

[gp_]

Bitcoin is a currency. It isn't meant for an investment vehicle. The importance of Bitcoin comes from a currency free from government regulation. It allows sellers/buyers to make transactions without concern of currency exchange rates.

Early adopters of Bitcoin may have seen a huge growth in capital simply because the exchange rate of established currency to bitcoin was so small. Now that Bitcoin has been around, the exchange rate has stabilized.

It may not be a bad idea to have a small rainy day fund in it (for the case of government collapse or absolute corruption), but Bitcoin isn't going to help you grow wealth.

the "free from government regulation" is an outdated viewpoint at this point... the government requires people (at least in the US) to pay taxes on bitcoin sold. yes, they know if you've sold bitcoin. what does "exchange rate of established currency" mean? people who bought early, bought before the block reward halved, therefore they owned more of the pool. because the pool has dwindled and the block reward has halved, people don't want to invest the same amount of time to mine for half the reward, let alone compete with the mining factories in china (who have the $$$ to throw at electricity and equipment to mine 24 hours a day). as the block continues to halve (dwindle), people who retain their bitcoin will see an increase in their holdings because there's a finite supply.

yes, people are losing faith in their governments. the blockchain creates transparency that doesn't exist with fiat currencies. the blockchain cuts out the middle person, creates anonymity with send/receive addresses, there's no 3rd party seizure, and they cannot be stolen.

[Metric Mouse]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

I laughed when I read the first bitcoin post up thread. Then I checked prices. Wow...

[GuitarStv]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

Wow, as of today's prices Bitcoin is only down 13% from where it was in 2013!

It's not hard to find stocks that return well over 100% over any given year.  What is very hard is predicting that they'll do it in the future and being right.

[gp_]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

So which is it, is bitcoin an investment like a 401k?  Or is it a hedge against the US Government collapsing?  If it's an investment, it seems pretty speculative to me and a worse option than the 401k / houses you own.  If you think the government might collapse, guns, ammo, and food are better options.

the average person doesn't know what bitcoin really is, how it works, or why it's even important. in turn, the average person looks at it like a scam, bad investment, etc., and will never own them until one day they'll wish they did 5 years earlier... depending who you talk to, a house, 401k, PM's, investing in the stock market are all risky/bad investments. each sector has been proven time and again to be manipulated at some point, with prices crashing.
 
again, the average person does not understand how bitcoin works, or will take the time to understand... i've made more from bitcoin in 3 years than i have from my 401k and an IRA over 10 years.

Since you are an expert, explain to me why you think bitcoin returns will outpace the stock market, housing, and other investments over the next 50 years.

i never said bitcoin would outpace the stock market, housing, etc., nor would i ever make a 50 year investment prediction. i simply said those things have all been manipulated at some point, where as with bitcoin, every transaction is logged in the blockchain, therefore creating transparency. since i last posted, bitcoin is up $70+ per coin. like with any investment, study inverse relationships to understand why something like bitcoin would rise/fall. most people won't because they view it as an outright scam.

[gp_]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

Wow, as of today's prices Bitcoin is only down 13% from where it was in 2013!

It's not hard to find stocks that return well over 100% over any given year.  What is very hard is predicting that they'll do it in the future and being right.

the price crashed in 2013 due to the demise of mt. gox. like with ANY investment/commodity (i'm not personally calling bitcoin an investment, although i've faired extremely well), prices rise and fall. you're totally right, there are of course stocks which can return 100%+ over any given year... i was simply asking what stocks they're personally invested in which had a better return than bitcoin this year.

[gp_]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

Wow, as of today's prices Bitcoin is only down 13% from where it was in 2013!

It's not hard to find stocks that return well over 100% over any given year.  What is very hard is predicting that they'll do it in the future and being right.

+1

This is what I think of bitcoin:

In 1593 tulips were brought from Turkey and introduced to the Dutch. The novelty of the new flower made it widely sought after and therefore fairly pricey. After a time, the tulips contracted a non-fatal virus known as mosaic, which didn't kill the tulip population but altered them causing "flames" of color to appear upon the petals. The color patterns came in a wide variety, increasing the rarity of an already unique flower. Thus, tulips, which were already selling at a premium, began to rise in price according to how their virus alterations were valued, or desired. Everyone began to deal in bulbs, essentially speculating on the tulip market, which was believed to have no limits.

The true bulb buyers (the garden centers of the past) began to fill up inventories for the growing season, depleting the supply further and increasing scarcity and demand. Soon, prices were rising so fast and high that people were trading their land, life savings, and anything else they could liquidate to get more tulip bulbs. Many Dutch persisted in believing they would sell their hoard to hapless and unenlightened foreigners, thereby reaping enormous profits. Somehow, the originally overpriced tulips enjoyed a twenty-fold increase in value - in one month!

Needless to say, the prices were not an accurate reflection of the value of a tulip bulb. As it happens in many speculative bubbles, some prudent people decided to sell and crystallize their profits. A domino effect of progressively lower and lower prices took place as everyone tried to sell while not many were buying. The price began to dive, causing people to panic and sell regardless of losses.

Dealers refused to honor contracts and people began to realize they traded their homes for a piece of greenery; panic and pandemonium were prevalent throughout the land. The government attempted to step in and halt the crash by offering to honor contracts at 10% of the face value, but then the market plunged even lower, making such restitution impossible. No one emerged unscathed from the crash. Even the people who had locked in their profit by getting out early suffered under the following depression.

The effects of the tulip craze left the Dutch very hesitant about speculative investments for quite some time. Investors now can know that it is better to stop and smell the flowers than to stake your future upon one.

Read more: Market Crashes: The Tulip and Bulb Craze | Investopedia http://www.investopedia.com/features/crashes/crashes2.asp#ixzz4TaYFaSVq
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your tulip analogy is an outdated comparison - explain how fiat currency is different from tulips? you have a piece of paper guaranteeing a unit of value backed by what? debts, promises... the average person won't take the time to understand what bitcoin actually is. i get it, the average person doesn't understand, but would you blindly invest in anything without doing your own research / due diligence?

look at the failing currencies/economies around the world. look at the manipulation of fiat currencies. look at things like brexit, the cap on the amount of money you can take out of china if you're a chinese citizen... are you aware there are bitcoin atms in most major cities? did you know that businesses like microsoft are shifting to "smart contracts" run on blockchain technology?
people make money by being acutely aware. bitcoin is no different.

[Metric Mouse]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

Wow, as of today's prices Bitcoin is only down 13% from where it was in 2013!

Unless one bought in early 2013... then they'd be up 15 fold! I suppose profits are all a matter of perspective...

[gp_]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

Wow, as of today's prices Bitcoin is only down 13% from where it was in 2013!

Unless one bought in early 2013... then they'd be up 15 fold! I suppose profits are all a matter of perspective...

do you consider 15x to be terrible?

obviously other investments have provided better returns, but we're not talking about having 100% of your investments in 1 thing (in this case bitcoin).

[GuitarStv]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

Wow, as of today's prices Bitcoin is only down 13% from where it was in 2013!

It's not hard to find stocks that return well over 100% over any given year.  What is very hard is predicting that they'll do it in the future and being right.

the price crashed in 2013 due to the demise of mt. gox. like with ANY investment/commodity (i'm not personally calling bitcoin an investment, although i've faired extremely well), prices rise and fall. you're totally right, there are of course stocks which can return 100%+ over any given year... i was simply asking what stocks they're personally invested in which had a better return than bitcoin this year.

I'm aware of the tragic demise for bitcoin caused by the collapse of Magic The Gathering: Online Exchange.  My point was that judging performance by two data points (in your case start of year vs now, in my case the height of bitcoin in 2013 vs now) is a terrible way to judge returns.  You need to examine rates of return over an extended period of time.

A 100% return is great.  A 1500% return is amazing.  It's only great and amazing if it happens after you've bought.  If you think that a 100% or 1500% return is likely next year, then by all means . . . explain your reasoning and the source of your confidence.

[Metric Mouse]

It's pretty simple - if you don't believe in fiat currency - buy food, guns and ammo.  If you believe in fiat currency - you aim to maximize reward while minimizing risk.  Bitcoin to me is a pure speculative play with no intrinsic value and high volatility.  MMM and other successful retirees didn't built their fortune on being "acutely aware" - they made it by saving a ton of money and investing it in simple stock market index funds.

Yes, and no one could ever fund a retirement by being acutely aware of real estate, or credit card trade lines or app development or small business ownership or blogging any thing other than investing in simple index funds.

[gp_]

but Bitcoin isn't going to help you grow wealth.

what investment has yielded you over a 100% return this year?

Wow, as of today's prices Bitcoin is only down 13% from where it was in 2013!

It's not hard to find stocks that return well over 100% over any given year.  What is very hard is predicting that they'll do it in the future and being right.

the price crashed in 2013 due to the demise of mt. gox. like with ANY investment/commodity (i'm not personally calling bitcoin an investment, although i've faired extremely well), prices rise and fall. you're totally right, there are of course stocks which can return 100%+ over any given year... i was simply asking what stocks they're personally invested in which had a better return than bitcoin this year.

I'm aware of the tragic demise for bitcoin caused by the collapse of Magic The Gathering: Online Exchange.  My point was that judging performance by two data points (in your case start of year vs now, in my case the height of bitcoin in 2013 vs now) is a terrible way to judge returns.  You need to examine rates of return over an extended period of time.

A 100% return is great.  A 1500% return is amazing.  It's only great and amazing if it happens after you've bought.  If you think that a 100% or 1500% return is likely next year, then by all means . . . explain your reasoning and the source of your confidence.

i've already explained why i believe it's a good investment. as 1 example, look at the state of the world outside the US and see how bitcoin is leveling the playing field for people in other countries.

also, i don't fully agree with "you need to examine rates of return over an extended period of time" regarding bitcoin. i'm looking ahead at what it can do (as a hold), which of course is speculative. i'm also not buying bitcoin, because i bought all mine in 2011.

[gp_]

It's pretty simple - if you don't believe in fiat currency - buy food, guns and ammo.  If you believe in fiat currency - you aim to maximize reward while minimizing risk.  Bitcoin to me is a pure speculative play with no intrinsic value and high volatility.  MMM and other successful retirees didn't built their fortune on being "acutely aware" - they made it by saving a ton of money and investing it in simple stock market index funds.

it's not that i don't believe in fiat currencies, it's that i used bitcoin as a hedge against everything else, because i saw value early on. i also bought bitcoins in the single digits, so everything you're saying doesn't apply to me personally. yes, it's speculative, yes there's high volatility, and sure there's no intrinsic value, at least to you. yes, i believe the price will keep going higher. i believe this because i understand how cryptocurrencies and the technology behind them work. your narrow minded statement of MMM and successful retirees making their fortunes solely by investing in index funds is of a certain subset of people. i'm very diversified, and am doing what they've done too - i never disagreed with it. you can't deny many people also build fortunes on being aware and acting at just the right time...

[gp_]

So what % of your portfolio is bitcoin?  What % is index funds?  Of course MMM and other successful early retirees didn't solely invest in index funds, I never said that, many also do real estate landlording, fixing/flipping and start their own internet businesses but those are sweat equity income not passive investments.  I haven't seen many ER bloggers investing more than 10% of their portfolio in alternative investments, so the point still stands that index funds is the vast majority of their passive investing.

i don't consider/factor bitcoin to be ANY part of my portfolio honestly. that's because my initial "investment" was extremely small in 2011... it does however make up a significant amount of my NW. roughly 70% of my portfolio consists of index funds, 20% PM's (physical), and the rest cash. as i've stated that based on my personal awareness of what's happening in the world, the value of bitcoin isn't in the reward (token), but as a payment utility for countries like china, india, venezuela, etc. the value has gone up almost $200 since i first suggested the OP buy a few (even at current prices). i don't believe bitcoin to be an "alternative" investment as the service it provides makes for a more reliable solution to roughly 1/3 of the worlds population.

if you care to learn more, you can research what a blockchain and smart contracts are.