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Started By
Message
Need some recommendations from the Money Board
Posted on 11/21/11 at 3:59 pm
Posted on 11/21/11 at 3:59 pm
The scenario:
I'm deploying soon and will be making quite a bit of money every month. Currently, I max out my IRA, put several hundred into mutual funds, and have an emergency fund set aside.
My question is what do you guys recommend I do with the everything else? What kinds of investments?
TIA
I'm deploying soon and will be making quite a bit of money every month. Currently, I max out my IRA, put several hundred into mutual funds, and have an emergency fund set aside.
My question is what do you guys recommend I do with the everything else? What kinds of investments?
TIA
2
Posted on 11/21/11 at 4:13 pm to webbgem
Save for a down payment on a house?
Posted on 11/21/11 at 4:19 pm to TheHiddenFlask
quote:
Save for a down payment on a house?
Definitely thought about doing that. For me, Hawaii is not the place I want to purchase property. I wanted to wait at least until my next duty station.
Is there a certain percentage of puchase price you'd recommend saving?
Posted on 11/21/11 at 4:27 pm to webbgem
If you're going to save for a down payment, think about a CD Ladder. Talk to your local bank and see if they can automate this if you won't have the time to manage: Definition below, more detail here (article is dated, so the %s are off, but concept is the same
Simply put, a CD ladder is a collection of CDs bought at regular intervals so that they’ll mature at regular intervals as well. Let’s say I wanted to create a simple CD ladder out of six month CDs. I buy one on the first of each month for six months. Then, on the first day of the seventh month, that first CD I bought matures and I collect a nice return. I can then either buy a new CD for the original amount and pocket the return, just keep all of the return and the original amount for some purchase, or I can buy a new CD for the total return. After that, each month, a CD matures and I can either buy a new one or use it for something else.
If you’re doing this with your emergency fund, you can set it up so that you always have a month’s worth of living expenses available in cash and each of the CDs represents a month’s worth of living expenses. Thus, each month, you’ll have a CD mature, collect a higher interest rate, and you can use the returns to buy another CD (if you don’t need it for an emergency), leaving you with a month’s worth of emergency fund at all times.
Simply put, a CD ladder is a collection of CDs bought at regular intervals so that they’ll mature at regular intervals as well. Let’s say I wanted to create a simple CD ladder out of six month CDs. I buy one on the first of each month for six months. Then, on the first day of the seventh month, that first CD I bought matures and I collect a nice return. I can then either buy a new CD for the original amount and pocket the return, just keep all of the return and the original amount for some purchase, or I can buy a new CD for the total return. After that, each month, a CD matures and I can either buy a new one or use it for something else.
If you’re doing this with your emergency fund, you can set it up so that you always have a month’s worth of living expenses available in cash and each of the CDs represents a month’s worth of living expenses. Thus, each month, you’ll have a CD mature, collect a higher interest rate, and you can use the returns to buy another CD (if you don’t need it for an emergency), leaving you with a month’s worth of emergency fund at all times.
Posted on 11/21/11 at 4:35 pm to webbgem
quote:
CD ladder
Exactly what I would do. It allows for higher interest rate while still maintaining a certian level of liquidity.
Posted on 11/21/11 at 6:15 pm to cpsilo1
The CD ladder concept isn't a bad one normally, just be aware that in the current rate environment the returns are pretty awful.
Posted on 11/21/11 at 11:39 pm to foshizzle
quote:
just be aware that in the current rate environment the returns are pretty awful.
I get a better return on my checking account, currently 2.25% up to $30,000.
Posted on 11/22/11 at 1:42 am to Layabout
quote:
I get a better return on my checking account, currently 2.25% up to $30,000.
How do you get such a good rate on your checking account?
Posted on 11/22/11 at 5:16 am to Layabout
--------------------------------------------------------------------------------
I get a better return on my checking account, currently 2.25% up to $30,000.
--------------------------------------------------------------------------------
How do you get such a good rate on your checking account?
Posted on 11/22/11 at 6:38 am to PlanoPrivateer
quote:
How do you get such a good rate on your checking account?
It started at 5.25% but it's been dropping over the past year. It was a promotional rate from Britton & Koontz Bank for Baton Rouge customers only. I normally keep about 15K in my checking account so this is just lagniappe.
Posted on 11/22/11 at 8:55 am to foshizzle
quote:
The CD ladder concept isn't a bad one normally, just be aware that in the current rate environment the returns are pretty awful.
yeah rates are bad, but if you're saving for a house (i.e. not willing to take a greater risk with it) and no need to touch the money, it's about the best you can do right now unfortuately
Posted on 11/22/11 at 8:58 am to cpsilo1
Savings accounts are giving better rates than CDs right now.
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