Author Topic: Recently free of all Debt, Ready to Invest!  (Read 2155 times)


  • 5 O'Clock Shadow
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Recently free of all Debt, Ready to Invest!
« on: December 19, 2014, 09:06:20 PM »
I'm looking for a good road map to success given my new-found financial freedom.

Income: Pretty reliable $2000 a month. I work as a server, so it fluctuates, but averages to an actual take home of 2k monthly or 24k annually. Increasable by working more (currently rarely work more than 25 hours, by design) or finding a higher paying gig (easy in a city with a booming restaurant industry) but for now I more than meet my needs.

Savings Goal: I should easily be able to save 1k monthly, and hopefully more as I continue to increase my frugality and/or income.

Current Assets: About $3500 in cash/checking account. I've been contributing to a Roth IRA since I was 18 (nearly 28 now) but am embarrassed to admit I don't know how much is in it because my dad has been managing it since we opened it. I've already made my max contribution for the year.

Where do I go from here? Starting with cash on hand, what is the min/max I should ever have in a checking account and savings account? My thoughts would be 1k in checking, 2k in savings, but if that's wasting some of my employees' time I'd like to know. Next, what is the smartest first step in investing future savings? Vanguard Index Fund? Lending club? REIT? A mixture of all three? Assume I'm willing to invest 1k monthly across any spectrum.


  • Stubble
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Re: Recently free of all Debt, Ready to Invest!
« Reply #1 on: December 20, 2014, 12:27:26 AM »
Wu Tang reference I assume?  Nice name!

(nothing of helpfulness to add)


  • Magnum Stache
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Re: Recently free of all Debt, Ready to Invest!
« Reply #2 on: December 20, 2014, 05:58:08 AM »
There is no one who can tell you what your min/max should be in checking and savings. It is up to you and your particular needs. What can be said is consider various risks. What is the likely risk of needing money quickly (loss of job/transportation, sick family member, sick you)? What other goals do you have that require cash on hand (buying a house w/ money down, further education)? Take some time and flesh this out, I'm sure you'll have a better idea of how much money you may want to have on hand. As your assets grow you should revisit this as it may not be as appropriate in later circumstances.

Where to go from here? Find out what the hell your Roth IRA is invested in. Then invest in broad index funds. Then educate yourself on other investing opportunities. You don't actually have to invest in anything other than index funds if you don't want to. There certainly isn't any reason to think that lending club will offer a better return. And as for REITs, well it all depends on the REIT. It's like saying "Should I invest in individual stocks?". Well that really depends on the risks you're willing to take.


  • 5 O'Clock Shadow
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Re: Recently free of all Debt, Ready to Invest!
« Reply #3 on: December 20, 2014, 10:41:34 AM »
CREAM, I'm happy to say we share the same income, age, profession, and savings goals. Here's my setup:
$2500 in cash in checking. 1k is slush money, 1.5k is first tier emergency fund.
$3000+ in Vanguard taxable account. 1.5k of this is second tier emergency fund. The rest is mid-term savings (home down payment, etc, down the road) or retirement savings if no big purchases. I just started automatic contributions to this account.
$X in Roth IRA at Vanguard. Retirement savings.
$Y in HSA. Retirement savings.

All of my money is invested in a single fund: Vanguard Total World Stock Index.

Keep it simple and keep costs low.


  • 5 O'Clock Shadow
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Re: Recently free of all Debt, Ready to Invest!
« Reply #4 on: December 20, 2014, 11:32:57 AM »
Simplicity is key to me, so here's what I'm hearing:
1) Keep an amount in checking/savings I'm comfortable with based on perceived risks (actually quite low, by design). I like RyeWhiskey's 2.5k firgure.
2) Divert all of my Roth into an index fund (Vanguard or something comparable)
3) Start my additional investing into something simple (again, broad index fund) making regular contributions
4) As my assets grow, my needs change (home downpayment), or as I educate myself on other investment opportunities, consider diversifying

These were my intuitions going in, thank you for all who contributed quick, clear, and concise answers. As a first time poster I look forward to more opportunities to participate in this community.