Author Topic: Help, I have extra money and don't know what to do next!!!  (Read 2497 times)

willkp23

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Help, I have extra money and don't know what to do next!!!
« on: March 27, 2015, 02:49:39 PM »
Hello Gents,

I've been reading your forums for a month or so and really enjoy your site!   I have just completed paying my home off last month and I now have 2-3k a month to invest.   I will list out some items so you will understand where I am financially.   My goal is to grow wealth!   

Family income around $115k per year
Home paid off (approximately worth 170k)
About 10k in the bank emergency fund
20% between my wife and I going into my 401k plus 10% in employee matches
401k Balance at around 150k between both of us
Maxing our a Roth IRA for me and my wife

I know you guys love Vanguard so I was contemplating doing a taxable account with Vanguard (lazy portfolio with funds you suggest) or going to Betterment to get some tax advantages.   What do you guys suggest?  I would like to build up a big pile of money with the possibility of drawing funds out if I decided to.   Thanks for your time!!!

Will


Psychstache

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Re: Help, I have extra money and don't know what to do next!!!
« Reply #1 on: March 27, 2015, 02:54:55 PM »
Do both of you max your 401ks?
Do either or both of you have access to a HSA?

Frankies Girl

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Re: Help, I have extra money and don't know what to do next!!!
« Reply #2 on: March 27, 2015, 02:57:06 PM »
There was a poll a while back that showed that at least 50% of the posters on here were women... so don't assume we're all "Gents" around here. ;)

You need to read up on an investment policy statement, decide what your asset allocation should be, and then invest accordingly.

http://www.bogleheads.org/wiki/Investment_policy_statement
http://www.bogleheads.org/wiki/Asset_allocation

But I would suggest you should be taking advantage of the 401Ks offered to you and your spouse and max them out first before heading to a taxable account. That's like the last step in a generally smart investment plan. First steps generally are a mix of 401k to match, HSA (if available), Roths (if eligible), 401K max out, (and there are discussions about which of these should be in what order) but THEN taxable last.

And you can do the exact thing for less money that Betterment offers. Just stick to Vanguard if you like them.

http://jlcollinsnh.com/stock-series/
^throwing this out there just in case you haven't read it, then READ it. It is awesome. :)


willkp23

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Re: Help, I have extra money and don't know what to do next!!!
« Reply #3 on: March 27, 2015, 03:17:14 PM »
I'm contributing about half of the full amount to my 401k and my wife probably about 25%.   We do not have access to an HSA.   I would like to make sure I can draw money or cash some out if I needed to without the penalty as well.

4alpacas

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Re: Help, I have extra money and don't know what to do next!!!
« Reply #4 on: March 27, 2015, 03:21:55 PM »
I'm contributing about half of the full amount to my 401k and my wife probably about 25%.   We do not have access to an HSA.   I would like to make sure I can draw money or cash some out if I needed to without the penalty as well.
If I were in your position, I would max out both 401ks (-$36k) and try to get my income low enough to be able to deduct for a tIRA. 
http://www.madfientist.com/retire-even-earlier/
http://www.madfientist.com/traditional-ira-vs-roth-ira/

willkp23

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Re: Help, I have extra money and don't know what to do next!!!
« Reply #5 on: March 28, 2015, 06:19:49 PM »
Would you still max out the 401k if your fund choices were limited or had high expenses?  My wife and I have about 5 funds in our 401k and they are somewhat high on expenses.   
« Last Edit: March 30, 2015, 06:32:09 AM by willkp23 »

4alpacas

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Re: Help, I have extra money and don't know what to do next!!!
« Reply #6 on: March 30, 2015, 11:39:05 AM »
Would you still max out the 401k if your fund choices were limited or had high expenses?  My wife and I have about 5 funds in our 401k and they are somewhat high on expenses.
It would depend on your tax rate and the "high expense" choices.