Hi. I found this website a few weeks ago and have been reading it every evening. I feel like I've found my people! And I'm learning a lot about managing money for financial independence. My situation will likely have many of you shaking your heads, and perhaps this can be a lesson for those just starting out, so here goes.
I'm 43 and single with no children. I've always been a saver, but I've also been VERY adverse to risk. If the account wasn't insured against loss of principal, such as a certificate of deposit, I wouldn't put my money into it. So I've been saving into certificates of deposits and savings bonds since I entered the workforce about 15 years ago. I always strived to save at least 10% of each paycheck and have been averaging 20% of take home for the last few years.
What do I have to show for my past efforts? Not as much as I feel I should. To put it simply, my savings have not grown except for the money I add to them. Well, duh. This summer I finally set up my 401k for 6% contributions in order to receive the benefit of my employer's 3% match (50% match up to 6%). I am kicking myself for not doing this sooner, much sooner. Today I opened a $1000 Roth IRA mutual fund with a "moderately aggressive" approach and will max it out before the end of the year. Deep breath. I think I'm moving in the right direction.
I started tracking ALL of my expenditures this last weekend and will see where my money goes. I have a rough idea, but I'd like see the actual totals.
Here's where I stand now. I have $280,000 cash or cash equivalent savings, plus a $55,000 emergency fund, and a $27,000 house purchase fund. I have company stock received through profit sharing (in a 401k) currently valued at $145,000. I am moving all of my cash savings to higher yield accounts, such as Capital One 360 and Barclays, as the money becomes available.
I plan to keep putting $500/month into cash equivalents for now because I wouldn't be comfortable if I didn't build that up a little more (and I mean I really wouldn't be comfortable). Clearly, I have issues in that regard. Regardless, any recommendations on what I do with the other $500? I could put it into my 401k, but my research indicates the funds are not performing as well as those available through Vanguard, etc. Is owning individual stocks ever a good idea? Is it reasonable to pursue a strong but not tax-advantaged fund in lieu of a non-optimal 401k?
Thanks for your time.