Author Topic: Help me figure out to do with my cash  (Read 5055 times)

scottschreffler

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Help me figure out to do with my cash
« on: August 31, 2014, 08:58:36 PM »
Small background on myself

Small (emphasis on small) business owner started it while getting my Business Degree from Pitt. Still operate it, but has been declining in revenue the last few quarters.

After I graduated I worked labor jobs and did some soul searching as to where and what I wanted to do while living at home with my parents.

Eventually leading me to my current labor job in the oil field in hopes that I can use my business degree in the large company I work at.

But right now I'm in a transition period where I don't know what is most logical to do with the cash I'm generating from my job because I could be relocated very soon if I can use my business degree. Not a good time to buy a house.

I'm putting 19 % of my money into 401k
And 1% into stocks.

I'm on pace to make around 65-70k this year single and only myself as a dependent.

Should I max out my 401k tax benefit?

My reason for not is that if I need cash I won't have access without the 10 percent penalty.

Potential opportunities could be a business investment, house purchase, other other investments.

Just looking for some good ideas as having money sitting in my bank account is not making me money and only encouraging me to spend more.
 

MrMathMustache

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Re: Help me figure out to do with my cash
« Reply #1 on: September 01, 2014, 03:42:30 AM »
An answer is highly dependent on your risk tolerance of course, but have you considered opening a brokerage account at Schwab or Vanguard?  Every month, I take any excess cash over my "emergency fund" level and throw it into a dividend aristocrat ETF.  You could always automate something like this through your work's direct deposit system too.

EDIT:  You could also open a Roth IRA.  The limit is only $5,500, and you don't get an up-front tax benefit, but you can always take out the original amount for a house later on if you really need to.
« Last Edit: September 01, 2014, 03:44:51 AM by MrMathMustache »

Retired To Win

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Re: Help me figure out to do with my cash
« Reply #2 on: September 01, 2014, 06:25:19 AM »
Since you did not make a mention of it in your original post, I'll bring up the topic of an emergency reserve.

If you already have one, fine.  If not, what I have done -- as an example -- is to stash away one year's basic living expenses in a 1% interest savings account.  Your comfort level with the amount to set aside may vary, but some set aside is called for.  Then you can look at the rest of your money pile as truly "at liberty" and available for positioning somewhere.

scottschreffler

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Re: Help me figure out to do with my cash
« Reply #3 on: September 19, 2014, 03:23:25 PM »
Ok  I'd assume for me that would be around 20,000 once I secure that. What should I look into next index and mutual funds?

trailrated

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Re: Help me figure out to do with my cash
« Reply #4 on: September 19, 2014, 03:37:15 PM »
Ok  I'd assume for me that would be around 20,000 once I secure that. What should I look into next index and mutual funds?

This is a great reference to start with

http://www.bogleheads.org/forum/viewtopic.php?f=1&t=6211

Without knowing your expenses, your goals, your tolerance to risk etc. it is hard to answer. Either way you should look into these things on your own then seek advice rather than asking what to do without understanding these things first. Best of luck and welcome to the forum!

Eric

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Re: Help me figure out to do with my cash
« Reply #5 on: September 19, 2014, 03:58:34 PM »
I'm putting 19 % of my money into 401k
And 1% into stocks.

I hope this 19% into your 401k is in stocks (with some bonds) as well.

I'd attempt to max my 401k if possible.  You make a lot of money for a young single guy.  You should have no problem saving enough money for any of your future ventures even with your 401k maxed.   

However, if you feel that's not possible, the Roth IRA could help, as you can always withdrawal your contributions (but not gains) at any point without penalty.  That can give you the best of both worlds - money invested that you can access with no tax implications.

scottschreffler

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Re: Help me figure out to do with my cash
« Reply #6 on: September 19, 2014, 04:13:46 PM »
I'm not actually sure it just is a retirement 2055 fund not sure what they are actually investing in. Suppose I should research that

trailrated

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Re: Help me figure out to do with my cash
« Reply #7 on: September 19, 2014, 05:40:20 PM »
I'm not actually sure it just is a retirement 2055 fund not sure what they are actually investing in. Suppose I should research that

Look into the expense ratios on the funds you have available, it makes A HUGE DIFFERENCE