Author Topic: Advice on what to do with spare cash? And other questions...  (Read 941 times)

ChatteringCat

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Advice on what to do with spare cash? And other questions...
« on: February 24, 2017, 09:35:37 AM »
I am pretty new to the site and the concept of FIRE. I found this site one day when I was googling something about retirement, since I am not overly fond of my job and I would love to quit given the chance. My SO and I already live quite frugally, we are in our early 30's and hope to have a kid or two in the next couple years.  I should also note that my SO is enlisted Active Duty in the US Military, and we expect to get his pension when he retires in about 7 years. I am currently employed as well, and I anticipate I should be through the end of 2017, but that is never something we count on being true due to the realities of military life. My spreadsheets say that we should be able to FIRE in 7 to 14 years, depending on different variables.

We have no debt.
We have about $45K spare cash.

Our savings are as follows:
a TSP (SO's Military, mine civilian) each
a Roth IRA each
a Betterment taxable account
an old 401k from one of my previous jobs that is not fully vested
some CDs

My Questions:
1) The spare cash... we would like to get that invested in the next couple days. Should we add that to the Betterment, or open a Vanguard account? Why?
2) Should we max out our TSPs? I anticipate our taxable income will be generally around $90K next year if nothing changes.
3) That 401K from one of my previous jobs bugs me... what should I do with it?

Catbert

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Re: Advice on what to do with spare cash? And other questions...
« Reply #1 on: February 24, 2017, 10:00:36 AM »
#3.  Roll your old 401k into you current TSP.  Great options and the lowest cost.  Easier to keep money all in one place.
#2  If you aren't getting all TSP match then you are leaving free money on the table.  If possible you should both max out TSP. 
#1.  No opinion

Is there a reason you aren't married?  Especially since you plan on having children. Wouldn't your SO would get more housing allowance and benefits?  You'd be entitled (I think) to job placement assistance when moving.  If SO goes overseas you'd have more rights as a trailing spouse than just a "friend".

ChatteringCat

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Re: Advice on what to do with spare cash? And other questions...
« Reply #2 on: February 24, 2017, 10:34:04 AM »
DH might have been a better designation, sorry. Force of habit. We take advantage of all the benefits we can.

Catbert

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Re: Advice on what to do with spare cash? And other questions...
« Reply #3 on: February 25, 2017, 09:45:16 AM »
I thought others might chime in on your Betterment vs. Vanguard questions.  Since no one did here are my thoughts. 

As I understnad it Betterment has two advantages:  constant rebalancing to meet your selected asset allocation model and tax loss harvesting/capital gains-loss balancing.

 I personally have never found frequent rebalancing to be necessary.  I only do it every couple of years.  When I worked and was adding to my 'stache I accomplished re-balancing by changing where I put new money.  So for I wouldn't need Betterments frequent re-balancing.

If you are a high tax bracket (25%) then tax loss harvesting and matching capital gains with losses could be worth it.  If you're in the 15% or lower bracket then you can fill it up with capital gains at 0% taxes so no advantage to Betterment.

MMM has a couple of articles about Betterment.  If you haven't already read them and the comments to see what works for you.