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Message
Moving money out of savings suggestions
Posted on 2/6/15 at 8:49 am
Posted on 2/6/15 at 8:49 am
Good morning money talk. Long time lurker, first time poster. My situation is that I have $10k sitting in a savings account that originally was going to be an emergency fund. I have decided to move that into something to kickstart my longterm financial planning as I don't really have anything in place (I'm 36 and am behind the eight ball, I know). I'm looking for recommendations on how where to move it. I have seen Vanguard VTSMX mentioned on here more than once, however their website recommends VTIVX based on my age. Also, if I am limited to contributing only $5500 this year, is there any advice on what to do with the rest? I really appreciate any suggestions.
5
Posted on 2/6/15 at 8:51 am to rhanse1lsu
Vtsmx is a great start.
Posted on 2/6/15 at 9:00 am to rhanse1lsu
Go introduce yourself on the OT rant
Posted on 2/6/15 at 9:02 am to rhanse1lsu
quote:
Also, if I am limited to contributing only $5500 this year, is there any advice on what to do with the rest? I really appreciate any suggestions.
The $5500 limit is for a Roth IRA (tax advantages)...there is no limit on the amount of money you can invest in the market, you just have to pay taxes on whatever you invest in a taxable account.
Edit: And actually you can still make 2014 Roth contributions, so if you wanted you could put it all in a Roth now ($5500 for 2014 and the rest for 2015) as long as you do it by April.
This post was edited on 2/6/15 at 9:04 am
Posted on 2/6/15 at 9:22 am to white perch
quote:
Go introduce yourself on the OT rant
Thanks. Probably will on the OT, but there's a little too much negativity on the rant for my taste.
Posted on 2/6/15 at 9:32 am to studentsect
quote:Thank you for clarifying that, I wasn't sure how that worked. I think that is what I will do.
And actually you can still make 2014 Roth contributions, so if you wanted you could put it all in a Roth now ($5500 for 2014 and the rest for 2015) as long as you do it by April
Posted on 2/6/15 at 9:33 am to rhanse1lsu
Dont think of it as negativity. Think of it as character building.
Posted on 2/6/15 at 9:37 am to white perch
If you decide to put it all in a ROTH IRA I wouldn't suggest investing the whole 10k in one fund right away. You can lower your risk by investing the minimum in the fund (say $3k) then investing $1k at the beginning of every month for the next 7 months.
Posted on 2/6/15 at 9:40 am to white perch
Dang. Well if that is character building, then we should have some Nobel award winners on our team by now. 
Posted on 2/6/15 at 9:50 am to yellowhammer2098
quote:
If you decide to put it all in a ROTH IRA I wouldn't suggest investing the whole 10k in one fund right away. You can lower your risk by investing the minimum in the fund (say $3k) then investing $1k at the beginning of every month for the next 7 months.
To add on to this post, the year limits for a Roth are related to putting the money into the Roth account, not actually investing the money. So the important thing is to make sure you get $5500 into a Roth IRA by mid-April so that you can take advantage of it for 2014. You don't actually have to invest the money into stocks or funds by any particular time (or ever); if you wanted to leave it sitting in your account doing nothing for years that would be fine. The key is just getting it into the account before the deadline...you can decide on your investment strategy later if you prefer.
Posted on 2/6/15 at 9:53 am to yellowhammer2098
Thanks yellowhammer.
Posted on 2/6/15 at 10:05 am to yellowhammer2098
quote:This is dollar cost averaging and is a good idea. However, another consideration would be, as someone else said, put $5000 in for 2014 and $5000 in for 2015. This will get you to Admiral level for many Vanguard funds and an even lower annual fee.
If you decide to put it all in a ROTH IRA I wouldn't suggest investing the whole 10k in one fund right away. You can lower your risk by investing the minimum in the fund (say $3k) then investing $1k at the beginning of every month for the next 7 months.
Good luck and congratulations on getting started.
Posted on 2/6/15 at 10:06 am to studentsect
quote:
studentsect
Thanks for adding this. I should have clarified in my post.
Thanks
This post was edited on 2/6/15 at 10:07 am
Posted on 2/6/15 at 11:19 am to rhanse1lsu
You can put all of it into a Roth. Mark $5500 as a 2014 contribution, the rest as 2015.
Keep in mind that you can pull back out the entire amount at any time without penalties, but earnings are tax-free. So there probably wasn't a good reason to put it into a savings account to start with.
That said, since it is emergency money you should still invest pretty conservatively.
Keep in mind that you can pull back out the entire amount at any time without penalties, but earnings are tax-free. So there probably wasn't a good reason to put it into a savings account to start with.
That said, since it is emergency money you should still invest pretty conservatively.
Posted on 2/6/15 at 1:32 pm to foshizzle
foshizzle: I know you often advocate keeping emergency funds in an IRA. Just out of curiosity, how much cash do you keep liquid in your bank account? Would you consider say, a transmission failure, or a ER visit (thinking of things that cost 1-3k) emergencies, or do you keep a certain amount as a cushion?
Just curious.
Just curious.
Posted on 2/6/15 at 1:37 pm to LSUtoOmaha
quote:
foshizzle: I know you often advocate keeping emergency funds in an IRA. Just out of curiosity, how much cash do you keep liquid in your bank account? Would you consider say, a transmission failure, or a ER visit (thinking of things that cost 1-3k) emergencies, or do you keep a certain amount as a cushion?
Just curious
I can probably help answer this. Having a credit card will do the trick for 2/3 days easy. At least until you can transfer funds into your checking to cover the CC bill.
Since medical bills don't incur interest(usually) it isn't a big deal to get those worked out.
If you're really in a jam, you could always open a 15/18 month 0% interest CC. Put it on that, and pay that off over time.
Lots of options if you are responsible. If you don't have that control, keep extra cash.
This post was edited on 2/6/15 at 1:41 pm
Posted on 2/6/15 at 1:40 pm to Teddy Ruxpin
I guess. It just seems like a hassle. Do you do this too?
Posted on 2/6/15 at 1:41 pm to LSUtoOmaha
quote:
I guess. It just seems like a hassle. Do you do this too?
I don't see it as a hassle. We have the internet. I can transfer money in 30 seconds.
I haven't run into a situation where I've needed $500 cash on the spot my entire adult life, and couldn't think of one. Can anyone else? Outside of scalping tickets of course.
This post was edited on 2/6/15 at 1:43 pm
Posted on 2/6/15 at 2:00 pm to Teddy Ruxpin
That makes sense regarding the emergency part. What about for non-emergent things that you will be purchasing that cost a few thousand dollars (trips, down-payment on car, etc). Do you save for this, or do you just take it out of your IRA when needed?
Posted on 2/6/15 at 2:12 pm to LSUtoOmaha
I keep EF and Kids College savings in my ROTH IRA.
I keep a couple months pay and savings for trips and cars and the new roof i need
in an online savings account.
I keep a couple months pay and savings for trips and cars and the new roof i need
in an online savings account.
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