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Started By
Message
Advice needed for situation....
Posted on 12/28/14 at 10:16 am
Posted on 12/28/14 at 10:16 am
Short and sweet:
I'm 35 and my wife is 34
$500k in bank (cash)
$265k paid off house
$80k paid off piece of land for possible future home build
Two vehicles paid off
$200-$300k/year income
s
Putting max of approximately $50k in 401k/profit sharing (I a business owner)
Married with 5 year old twins
$10k total private school expense
No debt of any kind
$125k in old retirement funds from previous job
Two roth IRA's at $30k each...Can't put anymore in due to salary being too high
$2 million of term life insurance
Questions...
1. Would you do any specific type of college education planning? (I live in Louisiana)
2. Money keeps piling up in the bank not keeping up with inflation. Originally was saving to build a new home debt free, but the more we look at it, our home is good enough (2000 sq. ft.) and I don't see it worth it to build a bigger home (1000 sq. ft. bigger) and have to pay taxes on a $500k house (Live in Lafayette)...So where would you invest?
3. I am in the construction industry and it is hot. I have been very conservative with my business and I think it could handle a downswing of up to 2 years. Just gave this to give a little more insite...My income is not guaranteed is all I am trying to say.
I realize a lot of people would say why pay off a house with such low interest rates, but I just like the feeling knowing it is paid for. I don't trust finance folks trying to sell me stuff. I was just wanting some advice from this board that I have enjoyed so much over time. Thanks in advance.
I'm 35 and my wife is 34
$500k in bank (cash)
$265k paid off house
$80k paid off piece of land for possible future home build
Two vehicles paid off
$200-$300k/year income
s
Putting max of approximately $50k in 401k/profit sharing (I a business owner)
Married with 5 year old twins
$10k total private school expense
No debt of any kind
$125k in old retirement funds from previous job
Two roth IRA's at $30k each...Can't put anymore in due to salary being too high
$2 million of term life insurance
Questions...
1. Would you do any specific type of college education planning? (I live in Louisiana)
2. Money keeps piling up in the bank not keeping up with inflation. Originally was saving to build a new home debt free, but the more we look at it, our home is good enough (2000 sq. ft.) and I don't see it worth it to build a bigger home (1000 sq. ft. bigger) and have to pay taxes on a $500k house (Live in Lafayette)...So where would you invest?
3. I am in the construction industry and it is hot. I have been very conservative with my business and I think it could handle a downswing of up to 2 years. Just gave this to give a little more insite...My income is not guaranteed is all I am trying to say.
I realize a lot of people would say why pay off a house with such low interest rates, but I just like the feeling knowing it is paid for. I don't trust finance folks trying to sell me stuff. I was just wanting some advice from this board that I have enjoyed so much over time. Thanks in advance.
This post was edited on 12/28/14 at 10:19 am
11
Posted on 12/28/14 at 10:25 am to dallaslsufan
First off, congrats. You're killing it.
I'd get that 500k into investments as soon as you can. Even if they are low risk. Inflation is taking a bite out of your spending power every day. Look into some vanguard index funds or maybe set a portion aside to buy an income property.
Set your kids up a 529 plan (google it).
Just keep doing whatever you're doing. You really are kicking arse.
I'd get that 500k into investments as soon as you can. Even if they are low risk. Inflation is taking a bite out of your spending power every day. Look into some vanguard index funds or maybe set a portion aside to buy an income property.
Set your kids up a 529 plan (google it).
Just keep doing whatever you're doing. You really are kicking arse.
Posted on 12/28/14 at 10:27 am to dallaslsufan
Congratulations. You're doing very well. Hats off to you.
For college, I would put $5,000-$10,000/year in each of the twins brokerage accounts (such as Schwab with low or no fees) with you named as the custodian of a minor's account. Work the money into index or growth (or both) stock mutual fund(s) and reinvest the dividends.
It's what I did when my kids were infants and their stock money paid for their entire college, meaning no student loan debt for them when they graduated. Plus they had a five figure portfolio when they graduated giving them a nice start on life with money in the bank.
For college, I would put $5,000-$10,000/year in each of the twins brokerage accounts (such as Schwab with low or no fees) with you named as the custodian of a minor's account. Work the money into index or growth (or both) stock mutual fund(s) and reinvest the dividends.
It's what I did when my kids were infants and their stock money paid for their entire college, meaning no student loan debt for them when they graduated. Plus they had a five figure portfolio when they graduated giving them a nice start on life with money in the bank.
Posted on 12/28/14 at 10:30 am to I Love Bama
Thanks...I appreciate the info.
I know that I shouldn't have that much cash sitting in the bank...It just makes me feel good knowing I have that buffer for worst case scenario situations. With the market being at such a high right now, I just feel nervous converting cash into investments. That is the same way I feel about rental property. Makes me very nervous when the market in Lafayette is as high as it is.
In the past, when I looked into the 529 plan, I always got a little nervous about what happens to the money if my kids don't need it (scholarship, choosing a different path, etc...)...
I know that I shouldn't have that much cash sitting in the bank...It just makes me feel good knowing I have that buffer for worst case scenario situations. With the market being at such a high right now, I just feel nervous converting cash into investments. That is the same way I feel about rental property. Makes me very nervous when the market in Lafayette is as high as it is.
In the past, when I looked into the 529 plan, I always got a little nervous about what happens to the money if my kids don't need it (scholarship, choosing a different path, etc...)...
Posted on 12/28/14 at 10:31 am to LSURussian
I really like the brokerage idea. Seems much more flexible...You just lose the tax incentives...
Posted on 12/28/14 at 10:31 am to dallaslsufan
Do you know what a hard money lender is? With your stack of cash, it's something I would give serious consideration too. Returns are very good with limited risk.
Posted on 12/28/14 at 10:32 am to dallaslsufan
As I've gotten a little older I don't stress over "is my money working as hard as it could?"
You guys have a rock solid base and I love the decision to NOT build a new house, smart.
My point is this, the security of knowing you have money in the bank is more valuable than .08% return, especially if it keeps piling up.
You guys have a rock solid base and I love the decision to NOT build a new house, smart.
My point is this, the security of knowing you have money in the bank is more valuable than .08% return, especially if it keeps piling up.
Posted on 12/28/14 at 10:35 am to Lakeboy7
quote:
My point is this, the security of knowing you have money in the bank is more valuable than .08% return, especially if it keeps piling up.
This is terrible. I mean just awful.
Posted on 12/28/14 at 10:40 am to dallaslsufan
quote:Yep. It's a trade off. Like you, I was reluctant to put the money into a dedicated tax-advantaged account and what if my kids didn't even go to college? So I wanted them to have the flexibility, too, even after college to have a decent nest egg to start life with. My kids used part of their stock funds nest egg to pay a down payment on their first house. And they STILL have a five figure balance in their stock portfolio.
..You just lose the tax incentives...
Regarding being reluctant to put money into the stock market now, that's understandable but in the case of your twins, it's pretty much irrelevant. Don't throw all the money into the market all at once but use a disciplined time table, such as putting 33% of whatever you give the twins into the market every quarter for the next three quarters and reinvest the dividends.
If the market goes down, the dividends will buy more shares and your next 1/3 tranche will buy more shares. If the market goes up, then you've got a gain on the money already invested so whoopee!
Since the twins won't need the money for college for 13 years, or so, the power of compounding the dividends plus the new annual money will build up quickly regardless what the market does temporarily.
Posted on 12/28/14 at 10:41 am to Lakeboy7
quote:
My point is this, the security of knowing you have money in the bank is more valuable than .08% return, especially if it keeps piling up.
Posted on 12/28/14 at 10:54 am to dallaslsufan
quote:That is by far the biggest negative to your whole situation. Let your money make you more money rather than losing $5,00-$7500 each year to inflation
$500k in bank (cash)
Posted on 12/28/14 at 10:57 am to Lakeboy7
quote:
My point is this, the security of knowing you have money in the bank is more valuable than .08% return, especially if it keeps piling up.
Posted on 12/28/14 at 2:24 pm to TigerTatorTots
quote:
TigerTatorTots
funny, lets touch base after the selloff.
This post was edited on 12/28/14 at 2:27 pm
Posted on 12/28/14 at 2:39 pm to Lakeboy7
All a sell off does is give him a better entry point. He'll call you right back to let you know his money has gone up 100% while you collect your 0.08%.
In the OPs situation its a no brainer to use the majority of the cash for investments and not a savings account.
In the OPs situation its a no brainer to use the majority of the cash for investments and not a savings account.
Posted on 12/28/14 at 2:41 pm to dallaslsufan
Obligatory recommendation of Lendingclub.com notes.
Posted on 12/28/14 at 2:46 pm to Big Saint
quote:
his money has gone up 100% while you collect your 0.08%.
That's a big selloff.
Posted on 12/28/14 at 2:53 pm to dallaslsufan
First off, this is a fine example of humblebragging. LOL, just messing with you.
I'm curious... you own a construction company from what I gather... do you have a college degree? To get that kind of income from owning your company at your age is amazing.
Does your wife work? How much of that income is yours vs hers?
Do you have any professional advisers? If not... I would recommend finding a good CPA to work with. I think one of your big issues is tax planning at that income/asset level.With you owning your own business, there are some other things that can be done to cut down on taxes (for example, a defined benefit plan).
Do you have any disability insurance? I would look at that.
I would keep at least a year's worth of money in pretty safe investments, as you realize your industry has peaks and valleys. If you had to guess what an awful year for you would be... what kind of income level is it?
A lot of your risk depends on if your wife is working or not. If that income is between two people, I would be willing to take on some more risk.
As far as investments... you sound like you might be now considered an accredited investor which opens up some really nice avenues for you.
I would also spend some time doing some estate planning. I don't think you are too young especially if you think your business will grow. With your kids, there may be some business ownership via trusts, family partnership, and other opportunities to consider.
I'm curious... you own a construction company from what I gather... do you have a college degree? To get that kind of income from owning your company at your age is amazing.
Does your wife work? How much of that income is yours vs hers?
Do you have any professional advisers? If not... I would recommend finding a good CPA to work with. I think one of your big issues is tax planning at that income/asset level.With you owning your own business, there are some other things that can be done to cut down on taxes (for example, a defined benefit plan).
Do you have any disability insurance? I would look at that.
I would keep at least a year's worth of money in pretty safe investments, as you realize your industry has peaks and valleys. If you had to guess what an awful year for you would be... what kind of income level is it?
A lot of your risk depends on if your wife is working or not. If that income is between two people, I would be willing to take on some more risk.
As far as investments... you sound like you might be now considered an accredited investor which opens up some really nice avenues for you.
I would also spend some time doing some estate planning. I don't think you are too young especially if you think your business will grow. With your kids, there may be some business ownership via trusts, family partnership, and other opportunities to consider.
This post was edited on 12/28/14 at 2:57 pm
Posted on 12/28/14 at 3:32 pm to Lakeboy7
You clearly don't understand investing and are the only person in the thread who believes the 0.08% savings account is the right move for all of the savings.
Posted on 12/28/14 at 3:50 pm to Big Saint
Im sure Regions made you a great financial planner, and congrats on the day and a half off, but reading comp seems fuzzy for you.
Nothing a continuing ed course at BRCC couldnt help.
Nothing a continuing ed course at BRCC couldnt help.
Posted on 12/28/14 at 3:58 pm to Lakeboy7
You really should stop. You look like a fool. It's ok to have differing opinions. I'd say we have a lot of that on this board. But literally nobody will agree that your advice is sound. It's just awful. Like the worst I have ever heard....
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