Author Topic: Extra Cash  (Read 4077 times)

Northwestie

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Extra Cash
« on: January 11, 2016, 05:09:33 PM »
No debt, house paid off.  Spouse and I together have about $160 cash, which seems a bit much for emergency.  Given the crappy interest rates what are folks doing with extra cash?

Philip Marlowe

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Re: Extra Cash
« Reply #1 on: January 11, 2016, 05:28:47 PM »
I assume you mean an extra $160,000 sitting in some type of non-interest bearing account (or at least, not a meaningful interest rate)?  The crappy interest rates really only apply if you're quite literally squirreling that money away in a typical savings account or CD (or bonds).

First, can you determine how much of that $160,000 IS for emergency use?  People have varying risk tolerances, but for my family its six months of expenses in an easily-accessible checking account.  Since you don't have a mortgage, it shouldn't be that much which is great.

Are you already maxing-out available tax-advantaged accounts like a 401(k) and Roth IRA?  Do you have any kids (so perhaps a 529)?

How much of that $160 are you left with now?

If you're in really good shape with all of those - I do two things: 1) I do the "boring" thing and just keep plowing money into my S&P 500 mutual fund; and 2) to keep things interesting, I actively invest a small portion of my funds.

You can join an informal investment club or perhaps start a mini-club with your spouse.  Do brief presentations to each other on interesting stocks to purchase and why.  Maybe you want to "risk" some of your money on something cutting edge, or be safe and finally buy some stock in Apple or Coca-Cola or J&J or something.  Just make sure you're OK losing this money - it cannot be part of your FIRE plans.

There are many options - the above is a reflection of my personal situation so take that for what it's worth here on the Internet.

PS - if you meant literally "$160" a month, it's actually no different.  Determine how much of that per month you need for emergencies, check your tax advantaged account use and have fun with the rest.

browneyedgirl

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Re: Extra Cash
« Reply #2 on: January 11, 2016, 06:15:30 PM »
I'm assuming it's literally $160 in which case... nachos, netflix, and chill.

TheAnonOne

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Re: Extra Cash
« Reply #3 on: January 12, 2016, 01:34:54 PM »
I'm assuming it's literally $160 in which case... nachos, netflix, and chill.

If it's really only $160, then it seems quite SMALL for an emergency fund.... Borderline non-existent.

frugalnacho

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Re: Extra Cash
« Reply #4 on: January 12, 2016, 01:52:55 PM »
I'm assuming it's literally $160 in which case... nachos, netflix, and chill.

If it's really only $160, then it seems quite SMALL for an emergency fund.... Borderline non-existent.

I'm with browneye, I like the cut of her jib.  You don't consider running out of nachos an emergency?


Northwestie

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Re: Extra Cash
« Reply #5 on: January 12, 2016, 11:05:07 PM »
Ha! Got the nachos covered.  That would be $160k - emergency fund taken care of outside of this, been maxing out our 401ks for decades.

Bertram

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Re: Extra Cash
« Reply #6 on: January 13, 2016, 04:47:02 AM »
No debt, house paid off.  Spouse and I together have about $160 cash, which seems a bit much for emergency.  Given the crappy interest rates what are folks doing with extra cash?

Well, stock-market, more specifically broad, index based ETF for long-term investment (>15 years).
I thought that's what most people are doing, unless they have a specific skill set and interest in something that earns them a better return.

steviesterno

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Re: Extra Cash
« Reply #7 on: January 13, 2016, 05:49:03 AM »
oh man, i was hoping this was really $160. I wanted someone to put that you should invest it, and that with the 4% rule you could withdraw $6.40 a year (or $0.53 a month) for life. you know, until SS kicks in.

tobitonic

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Re: Extra Cash
« Reply #8 on: January 13, 2016, 07:28:40 PM »
Investments or charity?

Our extra money goes toward the kids' college funds and charity.

Northwestie

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Re: Extra Cash
« Reply #9 on: January 14, 2016, 10:03:51 AM »
Kid is out of college, maybe we have 3 years of FT work before cutting back.  Both of us really like our work.

Dumping funds into a Vanguard TSM fund or similar is an option, but given our portfolio is balanced now I was looking for something a w/a bit less risk.  Was thinking Ginnie Mae Funds, which seem to fluctuate less.

Roboturner

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Re: Extra Cash
« Reply #10 on: January 14, 2016, 10:24:40 AM »
Kid is out of college, maybe we have 3 years of FT work before cutting back.  Both of us really like our work.

Dumping funds into a Vanguard TSM fund or similar is an option, but given our portfolio is balanced now I was looking for something a w/a bit less risk.  Was thinking Ginnie Mae Funds, which seem to fluctuate less.

could just throw it into betterment if you're afraid of balancing, set your slider to like 50/50? haha

Greenback Reproduction Specialist

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Re: Extra Cash
« Reply #11 on: January 14, 2016, 10:43:35 AM »
I am partial to stocks and real estate. That being said, I would pick up a couple rental houses and plow some into energy stocks... Both are pretty cheap right now.

This is of course keeping a healthy portion of that for a rainy day fund.

browneyedgirl

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Re: Extra Cash
« Reply #12 on: January 14, 2016, 07:38:12 PM »
With $160k I would expand my answer... nachos, netflix, chill, and Vanguard mutual funds. Vanguard 500, a REIT fund, and a bond fund.