The ideal is that you are actively saving money each month. So if you needed to spend something you'd be spending it from your income (whether that's 1 paycheck or 2 or 3, etc). The ideal is to keep your savings untouched for retirement.
How often are you going to be touching this money?
Put the $30,000 in stock symbol O (Reality Income)
That should give you $130+ every month in dividends alone. Forget what the stock price does. Divert the dividends into treasury bonds and see what kind of insanity that produces or shoot them over to a cd-- or god forbid have the nerve to reinvest and get an extra $0.60 every month payed to you (compounding mind you)
Most people here (including me) will argue that new investors should not invest in individual stocks because they don't know what they are doing and are more likely to harm their portfolio than improve it. A good rule is to not invest in something you don't understand. I have quite a bit of money and I've never heard of O.
I plan to touch the money as needed when unexpected expenses come up. I would say 2 to 3 times per year.
For retirement I started late in the game, but have been maxing out my IRA yearly contributions.
But for this saving / emergency money I think I can do better than just have it sitting in a high yield savings account.
mrpercentage's 'my size fits all' approach would be dangerous here. The last thing you want to do is invest
$30k into a single stock, the day you need the money it could be worth very little. You shouldn't invest short term cash into any stock. You need to ask yourself what kind of unexpected expense can arise and why aren't you already budgeting for it. If you can't budget for it you need an emergency fund. How much should that emergency fund be? Safe margin of error is 6-12 months living expenses.
- I would suggest, holding your 6 month emergency fund (which can be use for unexpected expense) in a savings account.
- Hold onto 5500 for your 2016 IRA
- Invest the rest in a Vanguard Taxable account according to your Asset Allocation. See here if you're unsure.
http://www.bogleheads.org/wiki/Lazy_portfoliosDown the road if you get comfortable in with your expenses and are sitting on too much emergency fund, invest half of it, knowing you could sell it if you needed to.
Do you have access to a 401k? An IRA won't get you to far in retirement (especially early retirement) unless you have a huge taxable account or other income like rentals or a pension. Or you plan on funding your IRA for a 30+ year working career.
If you have access to a 401k, you should consider maxing it out by the end of the year, and living off your cash. Reducing your taxes by some tax free, tax sheltered investing working for you.
