Author Topic: What to do with an extra $1K - $2K per month  (Read 2792 times)

saijoe

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What to do with an extra $1K - $2K per month
« on: February 23, 2015, 09:56:57 AM »
Situation:  I am contributing all the tax deferred money that I can.  I can have an extra $1K to $2K per month that could go into a taxable account.  I'm pretty heavily invested in Index Mutual Funds in my 401K's and IRA's.  I'm 49 with a net worth of around $900K.  What should I do for the taxable account?

johnny847

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Re: What to do with an extra $1K - $2K per month
« Reply #1 on: February 23, 2015, 09:59:32 AM »
What does your Investment Policy Statement say to invest in?
Also, do you have a HSA?

saijoe

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Re: What to do with an extra $1K - $2K per month
« Reply #2 on: February 23, 2015, 10:29:47 AM »
Not sure what an Investment Policy Statement is?

johnny847

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Re: What to do with an extra $1K - $2K per month
« Reply #3 on: February 23, 2015, 10:30:30 AM »

Wolf359

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Re: What to do with an extra $1K - $2K per month
« Reply #4 on: February 23, 2015, 10:43:56 AM »
You've got about 10 years before you can actually access your tax advantage accounts without penalty.  You should build up taxable assets that you can use in the meantime.

Do you have an emergency fund?  Do you have any taxable assets?  What are your goals or objectives?  Do you need to touch the money in the short-term, or can it be invested for the long haul?  Are the taxable assets starting at 0, or do you meet fund minimums? Those factors will influence what you do with your additional cash flow.

GGNoob

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Re: What to do with an extra $1K - $2K per month
« Reply #5 on: February 23, 2015, 10:44:31 AM »
Most likely, your extra money will go into a taxable account invested in stock index funds. If that puts your overall allocation too heavily in stocks, you'll need to buy more bonds in your tax-advantaged accounts (preferably a Traditional IRA or 401k).

DrF

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Re: What to do with an extra $1K - $2K per month
« Reply #6 on: February 23, 2015, 10:57:06 AM »
What's the breakdown of your net worth?

I say this because you could probably retire tomorrow, if your annual spending is mustachian enough. Let's assume 600k investments and 300k home equity.

If you use the 4% withdrawal rate you could spend $24,000 annually. If you have your house paid off, and don't spend frivolously, then you could easily live off your money TODAY.

Please read about the Roth pipeline. Also, what you could do is load up your 401k and Roth IRA for 2015, then retire when you hit all your limits.

Congratulations on the net worth. Open your mind to the possibility of not having to work any more. Or, switch careers to something you actually want to do!

kpd905

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Re: What to do with an extra $1K - $2K per month
« Reply #7 on: February 23, 2015, 05:02:55 PM »
What are you annual expenses? And when do you plan to retire?

You've got about 10 years before you can actually access your tax advantage accounts without penalty.

Not true.