50K to invest today...WWYD

[dcteacher]

Ok, we are not savvy investors or high earners but do have IRA, 529s, emergency savings, etc. covered. We just sold our rental condo that was losing money each month and now have about 50K to invest for general growth and savings. Am looking at Vanguard index funds or ETFs but would just love someone to tell me what to do given the current market situation. Thanks for any advice!

[Frankies Girl]

You don't have to be a high earner to make it to FIRE - it's all about the savings rate!

In the case of investing, it really depends on your risk tolerance, your ages, what your goals are and lots of other little factors.

One of the big things to realize is that crashes and corrections happen regularily, but over the long term, the market always goes up. Oh, and that no one - not even the most highly paid investment guru out there - can predict when these dips and rises will happen. So don't put in money that you'll need in the next couple of years, since short term you might need it when it's down, but it will overall be there with more besides when you need it. And as far as a portfolio - simple is better. You don't need dozens of different stocks and bonds and funds. Go with low expense index mutual funds (there are total stock, total bond and total REITS out there) and you won't have to worry about needing help to manage your accounts or having your profits eaten up by high fees and expenses.

Do you have Roth IRAs or Traditional IRAs not already maxed out? In that case, I'd throw as much money in there as I could and put it into VTSAX, but that's a aggressive move if you're not sure how this stuff works, so do some research and figure out the stuff above.

As far as reading up on basic investing, knowledge is both power and piece of mind - JLCollins' stock series is a fantastic explanation and easy to read and understand: http://jlcollinsnh.com/stock-series/

Other good reads:

http://www.madfientist.com/shortest-path-to-financial-independence/
http://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy
http://www.madfientist.com/traditional-ira-vs-roth-ira/

[arebelspy]

We just sold our rental condo that was losing money each month

Smart.

Are you turned off of rentals based on that experience?  Because you could always put it towards a profitable rental...

[wannabfrugal]

You don't have to be a high earner to make it to FIRE - it's all about the savings rate!

In the case of investing, it really depends on your risk tolerance, your ages, what your goals are and lots of other little factors.

One of the big things to realize is that crashes and corrections happen regularily, but over the long term, the market always goes up. Oh, and that no one - not even the most highly paid investment guru out there - can predict when these dips and rises will happen. So don't put in money that you'll need in the next couple of years, since short term you might need it when it's down, but it will overall be there with more besides when you need it. And as far as a portfolio - simple is better. You don't need dozens of different stocks and bonds and funds. Go with low expense index mutual funds (there are total stock, total bond and total REITS out there) and you won't have to worry about needing help to manage your accounts or having your profits eaten up by high fees and expenses.

Do you have Roth IRAs or Traditional IRAs not already maxed out? In that case, I'd throw as much money in there as I could and put it into VTSAX, but that's a aggressive move if you're not sure how this stuff works, so do some research and figure out the stuff above.

As far as reading up on basic investing, knowledge is both power and piece of mind - JLCollins' stock series is a fantastic explanation and easy to read and understand: http://jlcollinsnh.com/stock-series/

Other good reads:

http://www.madfientist.com/shortest-path-to-financial-independence/
http://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy
http://www.madfientist.com/traditional-ira-vs-roth-ira/

Seconded this ^^^

Great advice Frankies Girl :)

[dcteacher]

Thanks for the advice; will check out the links and articles ASAP! Re ages, we are late 30s/early 40s but would love to not be working until 60s. So longish term is fine, I know better than to try to play the market. Simple is better for us, like one or two broad index funds that we can put it in and forget it.  Re another rental property, here in the DC metro area prices are sky-high and putting 50K down on a 300K property (that would be cheap!) isn't going to yield a profitable investment either. The condo was our previous home that we finally cut the sentimental ties to and got rid of, as MMM advises!

[mgreczyn]

We just sold our rental condo that was losing money each month

Smart.

Are you turned off of rentals based on that experience?  Because you could always put it towards a profitable rental...

For a complete novice considering rentals, how would you suggest approaching the subject? 

[arebelspy]

Re another rental property, here in the DC metro area prices are sky-high and putting 50K down on a 300K property (that would be cheap!) isn't going to yield a profitable investment either. The condo was our previous home that we finally cut the sentimental ties to and got rid of, as MMM advises!

Good call.

Based on where you're living, a profitable rental would have to be outside your area then.  People's comfort levels vary on that.  :)

For a complete novice considering rentals, how would you suggest approaching the subject?

I'd probably definitely start with education - the recommended reading list is a good start on that: https://forum.mrmoneymustache.com/real-estate-and-landlording/real-estate-book-recommendations/

[catccc]

Since I already have my tax advantaged accounts (401K/Roth/Backdoor 401K) maxed out, and found myself with extra cash, I just put 80K into a vanguard taxable account.  Since I could possibly need this $ in the near future (home down payment, maybe?), I put 30% in bonds (VBTLX) and 70% in stocks.  For the stocks, I split that out 80/20 in VTSAX and VTIAX (international stock index).  Someone here countered that you already have some international exposure in VTSAX, but I decided to split it out, anyway.