investment question

Hey guys,

Quick question for the stock/money gurus out there :slight_smile:

If I have maxed-out my roth IRA, and have a new job so I do not have 401k access, where should I put extra cash I have? I have been saving most of it in a savings account with 2% or so interest, and it seems like that’s probably not the best idea? I have big upcoming expenses in the near future, so I was just wondering if I should look at stocks or something else :slight_smile:

Thank you :slight_smile:

2% is incredible for a savings account these days. I would love to see where you are getting that. If you have upcoming expenses, you need to keep that cash safe and savings or a money market account is where it needs to be. If you have more than you will need, the remainder is the only part you have a real question on. That follows the same strategy as anything else. Potential gains versus risk plus liquidity and the tax implications. No one can give you a good answer without better numbers and your goals. If you really are earning 2% in a savings, you aren’t going to beat that anywhere you can have access to the money in the shorter term.

Preservation of capital.

Better 2% less tax than the risk of copping a 10% haircut on blue chips

Longer term maybe get something into non-USD denominated assets.

In Australia, the smart money is taking up some buying opportunities following short term selling of uranium stocks in the wake of Japan’s problems.

blah I meant to say “I do not have big upcoming expenses that I know of” :slight_smile:

That does make a difference.

I think most people would agree:

  1. Make sure you have your ‘cushion’ - 3 to 6 months expenses at your current rate - assuming you don’t have any debt at usurous rates.

  2. Pay down any debt.

  3. Consider buying the high-price high-value long-life item(s) you need.

No debt either…I’ve been lucky so far. I live in San Francisco though so a house seems not so possible right now :slight_smile:

NO debt? No school loans left over?

Well, if you need a better car (‘better’ as in more reliable or more fuel efficient), a high-ticket appliance - refrigerator, good suit, higher efficiency stove, new treadmill - now might be the time.

If you want to get into the market and don’t know a lot, you want about three low-fee mutual funds to get your feet wet.

I realize that I am not suppose to advertise, but this is advice and you asked for it. Find a financial adviser. It was one of the best things we ever did. Look up “Waddell and Reed.” Or ask anyone who seems more financially sound than you are who theirs is. (Do I LOOK more financially sound than the rest of the people here?)

A decent website that I have found is http://www.early-retirement.org/. They have a forum section to post your questions to as well as lots of useful information.

http://www.amazon.com/How-Invest-50-Step-Step/dp/006008779X

This is a very basic and very conservative (and inexpensive) book about starting to invest. If you’re unsure about investing you might like it.

Or you can join the little cluster of doper paticipants at www.lendingclub.com :smiley:

I’m a boring, safe investor. Personally, after building up a nice savings pad (probably a good bit more than a financial advisor would recommend–I have about 1.5-2 years of expenses saved), I sock everything else away in a low-cost, broad market ETF (like Vanguard’s Total Stock Market, ticker symbol: VTI), plus some bonds. I try to keep it at about an 80-20 stock:bond ratio. Every two weeks, I put a few hundred more into these investments (this is called “dollar cost averging.” You don’t try to time the markets, you just continually invest, and catch it on the highs and the lows.) I don’t believe in timing the markets. I don’t believe in short investments horizons. I don’t believe in reading the financial reports every day and getting stressed out about my holdings. As you get older, you should gradually shift more and more into bonds. If you’re looking at a 20-30 year investment horizon, this approach should average out to an annualized return of about 8-10% or so per year. Of course, past results are not indicative of future returns, yaddayaddayadda, but, with all the information available, I personally think this is the best low-risk strategy.