Author Topic: How to Stash the Extra Cash  (Read 2282 times)

bradb

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How to Stash the Extra Cash
« on: December 01, 2013, 05:30:44 PM »
I am looking for advice on how to invest $1000 a month of extra cash we have on hand. Here are our options:

Pay down our mortgage. Currently we owe $250,000 on our home worth $550,000. Our interest rate is 3.875%. We recently refinanced so we have about 28 years left on the mortgage. We plan to sell and downgrade in the next 7-10 years.

Add to our two kidsí college funds. We currently have about $13,000 each in 529 funds. Our oldest will enter college in 4.5 years, our youngest 7.5 years. We currently contribute $100 per month to each account. For each $1000 contributed it equates to about $100 back on our tax return (up to $4400 per year).

Increase our contributions to our 503b accounts. We currently contribute $450 each to our funds that are worth $88,000 and $65,000. We are currently aged 46-47, so we have about 12-13 years before we can access these accounts without penalty.

Start something new--such as a Vanguard Index Fund.

What is our best move? We have been socking it away in a nearly worthless savings account and would like to grow this stash!

davisgang90

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Re: How to Stash the Extra Cash
« Reply #1 on: December 02, 2013, 05:29:19 AM »
Kind of depends on when you plan to retire.  Your retirement savings numbers look kinda low if you aren't getting any pensions (other than SS).  I'd concentrate on upping those numbers and maybe put a smaller amount into an index fund if you plan to retire earlier than 59.


stevesteve

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Re: How to Stash the Extra Cash
« Reply #2 on: December 02, 2013, 05:38:26 AM »
I'd go with 403(b) or 529 for the tax advantage.  Your mortgage rate is low enough and you plan on moving that I doubt it's the best investment.  Your retirement level is too low to sustainably live off of from age 59 onwards so you're going to need to add to it.  Once that number is sustainable you can use cash and a taxable account to save for the years between your age and 59.  For the college accounts you're getting to the point where short-term market volatility could create problems since 4.5 years isn't much time.

bradb

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Re: How to Stash the Extra Cash
« Reply #3 on: December 02, 2013, 07:12:30 AM »
I failed to mention that we each have two pension funds. One is the Public Employees Retirement Fund. We can't contribute to those anymore, but I could retire on that in about 5 years at about $4k a month. If I wait 10 years that figure jumps to $6k a month. The other fund is a 401k that our employer currently contributes to. Those can be rolled over at retirement. We can't contribute extra to those.

stevesteve

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Re: How to Stash the Extra Cash
« Reply #4 on: December 02, 2013, 07:16:19 AM »
I failed to mention that we each have two pension funds. One is the Public Employees Retirement Fund. We can't contribute to those anymore, but I could retire on that in about 5 years at about $4k a month. If I wait 10 years that figure jumps to $6k a month. The other fund is a 401k that our employer currently contributes to. Those can be rolled over at retirement. We can't contribute extra to those.

Does that cover your current monthly budget?  If so, I'd put the money in the 529.