Author Topic: Where to invest extra money?  (Read 1378 times)

dionnenicole

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Where to invest extra money?
« on: October 29, 2016, 11:09:06 PM »
Hi all! I'm 33, and still relatively new to the investing game. Began within the last two years. Here is my financial situation.

1) 100% Debt Free
2) I've maxed out my Roth IRA (Vanguard VTSAX) for the last two years. (It's currently >$13K)
3) In July, I started investing in my company 401K by contributing to receive the highest employer match. (It ultimately ends up being 15% combined).
4) I have 6-Months of savings in my AllyBank Savings Account @ 1% interest.
5) I only live off of 50% of my income. The other 50% automatically goes into my Savings account.

My question is, what do I do with my money now? I want to continue to invest but from my understanding, the only other options for me are non-retirement accounts, correct? I read that MMM suggested VBINX but I'm still a little confused about what type it would be. I know it's an index fun but is that an IRA? All the different "types" still confuse me.
« Last Edit: October 29, 2016, 11:15:00 PM by dionnenicole »

MDM

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Re: Where to invest extra money?
« Reply #1 on: October 30, 2016, 08:00:10 AM »
I know it's an index fun but is that an IRA? All the different "types" still confuse me.

Last question first.  An IRA is a type of account, within which you can hold things like index funds.  See the chart below for one attempt to explain this:


Quote
My question is, what do I do with my money now? I want to continue to invest but from my understanding, the only other options for me are non-retirement accounts, correct?
From your post it appears you are contributing only up to the employer match in your 401k.  You may contribute up to $18K yourself.

See the 'Investment Order' tab in the case study spreadsheet for some thoughts on that topic.

You may also benefit from some "getting started" reading material (note that these may not give identical advice, but if you follow any of it you will likely do well):
www.etf.com/docs/IfYouCan.pdf
http://jlcollinsnh.com/stock-series/
http://www.bogleheads.org/wiki/Category:Getting_started
https://www.bogleheads.org/forum/viewtopic.php?f=1&t=6211

Good luck!

dionnenicole

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Re: Where to invest extra money?
« Reply #2 on: October 30, 2016, 11:54:52 AM »
Thank you so much, MDM! I have a lot of reading to do now so let me get to it! The chart really helped also.

MustacheAndaHalf

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Re: Where to invest extra money?
« Reply #3 on: October 30, 2016, 08:09:40 PM »
dionnenicole - Since it's late in the year, you might need to push your 401(k) contributions up significantly to reach $18k by the end of December.  You might be surprised to find your employer letting you contribute 50% of your salary into the 401(k) plan - as soon as you've contributed $18k they should cut it back to 0%.  Then you need to fix it in January or it could go back to 50%!  But that will let you max out the 401(k).