Author Topic: Investing while unemployed?  (Read 2831 times)

Ceichanski

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Investing while unemployed?
« on: August 06, 2016, 10:13:15 PM »
Can someone invest while unemployed?

Asking because wife was in an automotive accident last year that resulted in nearly $200k of medical (covered). She needed a massive spinal fusion, a knee surgeries, and is still struggling with memory loss due to seizures caused by the accident. She will have seizures for the remainder of her life.

We have two young kids (now 5 & 3), and she was unable to care for herself or the children. This resulted in me having to quit my job to stay home and care for my family.

Was going to go back to work next month while finishing college, but she has two more unexpected surgeries and will not be able to care for the kids full time for another few months.

Would really like to start investing, but don't know what options are available.


terran

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Re: Investing while unemployed?
« Reply #1 on: August 06, 2016, 10:33:20 PM »
If you have the money available you can certainly invest in a taxable account. That said, it sounds like your life is kind of uncertain right now, so you might want to consider keeping a larger emergency fund in the bank than you might otherwise.

Obviously you won't have access to an employer sponsored retirement account (401k, 403b, etc) while unemployed. If you currently have earned income of some kind you can invest in an IRA, if not then you're limited to a taxable brokerage account.

Ceichanski

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Re: Investing while unemployed?
« Reply #2 on: August 07, 2016, 10:10:40 AM »
Life will remain uncertain for a couple more years, and there is nothing that can be done to change this fact.

Anyways, we have an emergency fund that is large enough to pay our bills for the next two years. We also have some cash that would like to work for us. However, it wont be available till early next year. We're just doing research and learning what should be done with it. With this being said it could be ready sooner.

Have been pulling in some extra money this last 2 months - purchasing good used cars for $7-10k and reselling for a small profit. I drive them as my own, replace anything minor and insure they're in good running order, and have sold two vehicles earning me an extra $1250 profit from each. Only going to do this one more time, was just testing the waters for fun.

So with this said, I have $2500 now, and much larger chunk early next year, or possibly sooner. Would rather do this all at once after we have a better understanding of what we're doing.

When is a good time to invest? I know one can not predict future trends; however, does it make sense to start at the beginning of a year when starting out?

I've been reading a lot about S&P 500's.

Already have one investment gifted by my grandfather when he passed away four years ago. It is a 10 year annuity that is paying $200 a month. Not sure what it is worth, but thought annuities are better for older folks?

Feeling over whelmed with so much to learn.

ShoulderThingThatGoesUp

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Re: Investing while unemployed?
« Reply #3 on: August 07, 2016, 10:26:54 AM »
Good for you for keeping everything going and even making a little side money while getting a bunch of anvils dropped on you.

There's no bad time to invest - or perfect time - that anybody can predict. On average the market is always going up and it's very rare that anything invested today will be worth less ten years from now.

Your finances seem complicated and I think the right path might depend a lot of what all the magnitudes are - your spending, your assets, your wife's potential future medical needs, your goals. I think you should use the case study stickied topic at the top of this page, fill it out, and see what jumps out at the very helpful people here.

Kwill

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Re: Investing while unemployed?
« Reply #4 on: August 07, 2016, 10:44:26 AM »
Did you leave your job in 2015 or 2016? If it was 2016, you should be able to invest in an IRA as long as you do it before April 15 next year.

Seems like a good place to start would be finding out the details on the annuity from your grandfather. What would be the cash value if you wanted to cash it in and invest it in an index fund at Vanguard instead?

As far as where to start investing, have you read this post already? http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/

The one Mr. Money Mustache recommends is Vanguard Total Stock Market Index Fund (VTSMX). When I started, I read it wrong and signed up for the Vanguard 500 Index Fund Investor Shares (VFINX) instead. But either way, they're very similar and have about the same fees, etc. If the S&P 500 is easier for you to follow and understand, it's not a bad place to start.

You need a minimum of $3000 to open an account with either one. Once you have $10,000 in the fund, your shares will be converted to Admiral shares with a lower fee, so it's worth sticking to one thing at the beginning. You can transfer the money back into your checking account at any point, but the value can go up and down. Also, you have to wait awhile before reinvesting if you take money out-- a month maybe? I can't find it just now.

Choices

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Re: Investing while unemployed?
« Reply #5 on: August 07, 2016, 11:00:38 AM »
If you're planning to help your kids with college, you can invest in 529s for them. Unlike IRAs, 529s don't have to be earned income.

Ceichanski

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Re: Investing while unemployed?
« Reply #6 on: August 07, 2016, 11:23:37 AM »
Will look into doing building a case study later this week.

Only read into a S&P 500, and not any other similar investment.

 Already started researching VTSMX this morning.

Actually left my job in middle 2014 due to being very ill myself. Once the doctors figured what was going on and got it under control, I returned to work for about two weeks before my wife's auto accident in early 2015, then her father passed away less than a week after. All this caused me to fall behind in classes and used a medical withdraw. My college and instructors has been awesome through this whole ordeal. They all know what happened and have been very supportive giving me extra time, recording classes, etc. Very blessed!

This last couple years has been very rough. However, things are starting to turn around. My wife has two more operation this month.

Also, Kwill stated "Seems like a good place to start would be finding out the details on the annuity from your grandfather. What would be the cash value if you wanted to cash it in and invest it in an index fund at Vanguard instead?" Did not know this could be done. I'll contact the guy in charge of the trust on Monday and have him send out the paper work again.

Not entirely sure how annuities work.

Good news is, wife likes what we're doing and she's excited about taking charge of our future.

Nice to know about 529's, however, my mother has my children set up with college funds already. I will ask her where the accounts are sitting this morning.

Kwill

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Re: Investing while unemployed?
« Reply #7 on: August 07, 2016, 11:33:34 AM »
Also, Kwill stated "Seems like a good place to start would be finding out the details on the annuity from your grandfather. What would be the cash value if you wanted to cash it in and invest it in an index fund at Vanguard instead?" Did not know this could be done. I'll contact the guy in charge of the trust on Monday and have him send out the paper work again.

Not entirely sure how annuities work.

I'm not really sure how they work either, and it might not make financial sense to cash it out even if you can. But there almost certainly are details and small print, and you probably have at least a few different options.

Ceichanski

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Re: Investing while unemployed?
« Reply #8 on: August 08, 2016, 10:24:02 AM »
Hopefully someone chimes in about annuities. I've done some research, but need to know what type of annuity it is. All that is known it is worth a set amount that makes a minimum of $200 a month that is then sent to me for 10 years (7 remaining). Then once the 10 years is complete the money is released and we may do with it as pleased. Which will be reinvested.

Shor

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Re: Investing while unemployed?
« Reply #9 on: August 08, 2016, 10:47:26 AM »
Hopefully someone chimes in about annuities. I've done some research, but need to know what type of annuity it is. All that is known it is worth a set amount that makes a minimum of $200 a month that is then sent to me for 10 years (7 remaining). Then once the 10 years is complete the money is released and we may do with it as pleased. Which will be reinvested.
Might want to check on that... annuity money is usually guaranteed income exchanged for the base investment. The annutiy investment is usually tracked to an index so they will make 0-4% where their value will not drop below the original value, but they will not take part in gains above 4%. I always thought this translated to either a longer duration than expected, or a greater distribution, but they never ever give the money back at the end (which would make it more like a high yield 10% bond!)..