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if you're tied to five years for reasons, then HYSA or maybe CD ladder is probably the best way to go, but CD ladder incremental benefits are not large. The advantage is that if you believe interest rates will go down, you can lock in (what you believe will be) higher rates now. If you are not specifically tied to a certain timeline, the market is fine. The only disadvantage there is that in general, the stock market and housing market are correlated, so if you want to take advantage of some potential budget buying, your pile of money for a down payment may be a bit smaller.
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Sep 7, 2019 17:16
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KYOON GRIFFEY JR posted:if you're tied to five years for reasons, then HYSA or maybe CD ladder is probably the best way to go, but CD ladder incremental benefits are not large. The advantage is that if you believe interest rates will go down, you can lock in (what you believe will be) higher rates now. We're tied to five years only because I did the math and it's reasonable for us to have $100k in five years at our current savings rate. We can save $20k/year, plus $6k for full IRA, and then a few grand to refill emergency fund should have to tap it. My plan was to keep $20k liquid in my HYSA as an EF and then every time I exceed it to move that money into something else. Maybe 50/50 ETF and CDs so I get some diversity.
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Sep 7, 2019 17:23
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are you looking at a fairly resilient market (DC, NY, Boston, etc) or one that is much more subject to variability (Florida, Arizona, etc)
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Sep 7, 2019 17:35
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KYOON GRIFFEY JR posted:are you looking at a fairly resilient market (DC, NY, Boston, etc) or one that is much more subject to variability (Florida, Arizona, etc) Northern NJ. It's a resilient area, and I have two kids in school so I have basically a five mile radius to buy my next house since I need to stay in the same town due to proximity to a train station for my commuting, and my wife's job. My current house is extremely small but perfectly meets our needs right now. Our goal is to move into a slightly larger house (basically current house +1 BR and +1 Bath) in five years. If, at the 5 year mark, there's no house out there for ~$450k that meets our needs, the $100k can be used for a remodel, which I've already priced out with a couple contractors as a pretty good baseline for the project. Our lot is slightly small, and there's not a ton of room for expansion, so the better option is moving, but it's not a bad choice to stay where we are and just improve.
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Sep 7, 2019 17:47
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I just got a somewhat unexpected raise (expected 10k, got 30k). I'm currently living comfortably with a somewhat depleted emergency fund due to new house, so getting it back up is my first priority. But I expect in January I'll be back to my regular paychecks structure. I am currently doing 13% of my check into 401k and Roth and 5% into employee stock plan. 10% into savings kept me living without worrying about bills and still able to have fun (the joy of making good money being a single dude with no kids) So that means I'll have 20-25k a year that isn't really spoken for. I'm brainstorming on possible investments other than straight CD or HYS. Any suggestions?
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Sep 7, 2019 18:03
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Medullah posted:I'm brainstorming on possible investments other than straight CD or HYS. Any suggestions? Invest in retro video games. https://kotaku.com/deep-pocketed-collectors-are-fueling-a-retro-game-gold-1837073847 Don't do this.
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Sep 7, 2019 18:21
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Medullah posted:I just got a somewhat unexpected raise (expected 10k, got 30k). I'm currently living comfortably with a somewhat depleted emergency fund due to new house, so getting it back up is my first priority. But I expect in January I'll be back to my regular paychecks structure. Goon loan to me and I'll use it to buy my next house in 2.5 years instead of 5.
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Sep 7, 2019 18:27
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Uthor posted:Invest in retro video games. I've already done my fair share of dumb video game investment. But hey, my MAME cabinet is badass.
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Sep 7, 2019 18:28
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Medullah posted:I just got a somewhat unexpected raise (expected 10k, got 30k). I'm currently living comfortably with a somewhat depleted emergency fund due to new house, so getting it back up is my first priority. But I expect in January I'll be back to my regular paychecks structure. Congratulations on literally having more money than you know what to do with. For investments, you can do direct ACH deposit into a Vanguard taxable brokerage account and just buy some LifeStrategy funds. Plug it into your direct deposit and it'll be like you never even got a raise! You're also at a point where you might want to start thinking about charitable contributions.
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Sep 7, 2019 18:31
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Space Gopher posted:Congratulations on literally having more money than you know what to do with. Oh yeah I forgot my annual donation to the humane society.  That sounds like a solid plan. I'll definitely look into it. And yeah, it's a great problem to have. Still considering a trophy wife might be a good investment too.
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Sep 7, 2019 18:35
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Medullah posted:I just got a somewhat unexpected raise (expected 10k, got 30k). I'm currently living comfortably with a somewhat depleted emergency fund due to new house, so getting it back up is my first priority. But I expect in January I'll be back to my regular paychecks structure. It's not clear since you just stated percentages (of an unknown income), but you should be maxing your 401k and IRA before looking at other possible investments. Tax advantaged space is almost always best, barring a truly terrible ER. You may already be maxing these (wasn't clear), but figured I'd point it out just in case.
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Sep 8, 2019 05:32
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incogneato posted:It's not clear since you just stated percentages (of an unknown income), but you should be maxing your 401k and IRA before looking at other possible investments. Tax advantaged space is almost always best, barring a truly terrible ER. Yeah sorry, Roth is maxed and starting this year 401k will be as well.
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Sep 8, 2019 05:44
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Space Gopher posted:For investments, you can do direct ACH deposit into a Vanguard taxable brokerage account and just buy some LifeStrategy funds. Plug it into your direct deposit and it'll be like you never even got a raise!
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Sep 8, 2019 13:40
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Has anyone used National Cooperative Bank? The Money Market Account rate looks pretty good (I don't have any trouble meeting the minimum balance requirement) and I'm interested in using a coop bank. Currently using Ally. https://www.ncb.coop/personal-banking/savings-accounts
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Sep 12, 2019 04:13
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Tax question? Retirement question? Both? To simplify things, I'll say I'm getting a bonus of $250k/year the next 4 years on top of my base salary. The bonus is more than double our combined salaries each year. I've already been paid the bonus for this year, so three more payments coming starting 2020. Right now I just shoved it into my savings account giving me 1.9% interest and left it alone for a bit. Other details: * Bought a house 4 years ago, 30 year fixed, paying PMI ** Would like to do some fairly major renovations to the house in the next 6 months - unsure of the total scope and budget yet, but probably can use $20k budget as a good assumption for this exercise * Maxed out my Roth IRA and my wife's for 2019 already * Paid off her remaining student loans this year (under $2k was left, not huge), don't have any other debt besides the house * Contributing enough to my work 401k enough to get employee match, my wife gets a state pension plan from her job that doesn't have many options * We live perfectly comfortably, can afford a couple vacations a year on our combined the base salaries fine, aren't looking to change lifestyle or level of monthly spending Before this we were putting about 10% of monthly income into savings after paying loans and Roth IRA contributions to build up emergency fund more, we were at about 3 months before. What do I need to look out for when taxes roll around for 2019? Do I need to adjust my base salary withholding to deal with the bonus? They did take off the supplemental income 22% tax as part of the payment. Are there any other questions I should ask a tax account instead of asking a bunch of goons? Right now I'm thinking I leave 6 months emergency fund in savings, split what's left into house renovation fund, whatever I have to set aside for potential taxes, and kick the start retirement funds, with most of each subsequent year going towards retirement...somehow. Do I max out my 401k contribution to hit the $19,000 limit each year I'm getting this bonus? Then once I hit that, I'm only left with taxable accounts? Frinkahedron fucked around with this message at 04:12 on Sep 13, 2019 |
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Sep 13, 2019 04:06
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Frinkahedron posted:Do I max out my 401k contribution to hit the $19,000 limit each year I'm getting this bonus? Definitely do this. Paying down the house at least enough to get rid of the PMI is probably a good idea as well. Don’t fear taxable accounts. Long term capital gains is only 20%. As far as worrying about taxes, hopefully they withheld enough taxes before giving the bonus to you. If not then you’ll have to set aside enough to pay them and probably also have to file and pay quarterly estimated taxes to the IRS. You and your wife may want to discuss paying off the house completely. The numbers say investing in stocks is probably superior, but a paid off house means never having to worry about the mortgage payment. It’s really more of a personal family decision than anything. quote:Maxed out my Roth IRA and my wife's for 2019 already nelson fucked around with this message at 05:14 on Sep 13, 2019 |
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Sep 13, 2019 05:09
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Yes I hope they meant backdoor Roth, because the bonus alone would put them well over the limit.
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Sep 13, 2019 06:50
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nelson posted:Definitely do this. Thanks, good to know I'm not totally off in the 401k thinking for the next few years. Adhemar posted:Yes I hope they meant backdoor Roth, because the bonus alone would put them well over the limit. Nope! Cause this is the newbies thread. I didn't expect the bonus to be this high this year, so obviously I need to deal with the amount contributed this year in the Roth IRAs. Is it as simple as withdraw it ASAP or should I do something else? And I assume for the next few years, I simply can't contribute while I'm over the limit? Frinkahedron fucked around with this message at 23:09 on Sep 13, 2019 |
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Sep 13, 2019 23:03
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You’ll need to look into recharacterizing the Roth contribution: https://www.irs.gov/retirement-plans/ira-faqs-recharacterization-of-ira-contributions While you’re over the limit you can still do backdoor Roth conversions: https://www.bogleheads.org/wiki/Backdoor_Roth
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Sep 14, 2019 21:04
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Make sure you empty out your IRAs first ahead of doing the backdoor though. If your 401k allows for transferring in IRA assets that's a slam dunk way.
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Sep 14, 2019 22:50
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What's the best way to save for a large expense you know will come and don't know when? My car just hit 100k and my wife's car keeps getting recalled for various powertrain issues. We're both the sort that are happy to drive a car into the ground, and while my car might go for another 100k and hers may never have serious problems...we both need daily drivers, so when a car does break, it'll need to be replaced ASAP. Obviously the goal would be to keep financing to a minimum, and we have the excess income to plan for this expense. But where do you keep that money? Do I just get comfortable with keeping 15k or whatever in a HYSA/laddered CD in perpetuity?
Boxman fucked around with this message at 14:50 on Sep 23, 2019 |
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Sep 23, 2019 14:46
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Boxman posted:What's the best way to save for a large expense you know will come and don't know when?........ Do I just get comfortable with keeping 15k or whatever in a HYSA/laddered CD in perpetuity? If you don't know for sure it's more than 5 years out........yes. That's exactly what you do. And one can (someone will) argue 5 is too short.
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Sep 23, 2019 14:52
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Yes, high yield savings accounts are the right place for that kind of expected expense. Also, financing is a very good thing; learn to wisely use other people’s money, and it will enrich you greatly. Car loans, in particular, are often very low interest; you can take out 20k @ 0-4% with moderately good credit fairly easily. Even if you had the full 20k sitting in a bank account, don’t blow it all away... expected returns on other investments are much greater than 0%.
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Sep 23, 2019 14:54
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DNK posted:Car loans, in particular, are often very low interest; you can take out 20k @ 0-4% with moderately good credit fairly easily. Just remember this is a loan through a CU most likely - never, ever, ever, ever get financing through a dealer unless you've read the terms and conditions 17 times and know everything you're getting. It's nice to walk in to signing with a check for the amount they told you so they don't even try getting you to buy add ons.
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Sep 23, 2019 15:01
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Dealer financing — assuming you mean Manufacturer financing — is totally fine. “Toyota Financial Services”, etc, are all legit credit organizations. They subsidize their own vehicles and will offer you much lower terms than just about any other bank or credit union. Definitely walk into a dealer with some financing pre-approved (I.e up to 30k @ 4.5% over 60mo), and negotiate with the salesman on out the door price without revealing your own financing, but it’s not uncommon that they’ll be able to offer better terms if you’re buying new or CPO. Just take whatever’s cheaper.
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Sep 23, 2019 15:08
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For upcoming almost certain experiences the HYSA is the best bet. You basically want to be able to write a check when the time comes without too much hassle.
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Sep 23, 2019 15:09
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Medullah posted:Just remember this is a loan through a CU most likely - never, ever, ever, ever get financing through a dealer unless you've read the terms and conditions 17 times and know everything you're getting. It's nice to walk in to signing with a check for the amount they told you so they don't even try getting you to buy add ons. You don't always need to do this through a CU directly. I had no intention of financing my wife's (used) car. The dealership asked if they could see if they could get me an attractive rate - and they did. So attractive I financed about 70% of it. I still hate seeing that payment go every month 2 years later (it's literally the only thing other than mortgages), and almost paid it off last week until I looked at "year to date interest - $320" and said "well, dammit, why wouldn't I leave that money in the market and take the 5%+ spread?" FYI, that attractive rate they got me was underwritten by a semi-local credit union. I inquired at mine before buying and wasn't impressed. I also inquired at mine for my mortgages and also wasn't impressed. Not quite sure HOW they make their money, but I suppose it's from people who don't shop around. At least they're nice and it's a good local bank account to have for checking.
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Sep 23, 2019 15:16
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Motronic posted:If you don't know for sure it's more than 5 years out........yes. That's exactly what you do. Thanks for the replies everyone. I knew that was the solution for short term expenses but didn’t know when to tip over and trade some liquidity for return. Edit: and thanks for the reminders that debt isn’t categorically bad. 
Boxman fucked around with this message at 15:20 on Sep 23, 2019 |
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Sep 23, 2019 15:17
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Imo the way to do it is to have: Emergency fund @ HYSA 2x average monthly expenses @ Checking and Risk-adjusted-expected-future-payments @ HYSA with Other Money @ equities / bonds / etc The concept there is that there’s a lot of stupid bullshit that you can itemize into “expected future payments”, but you don’t need to carry the full purchase price for all of them in cash at all times. If you know you might need a new roof, car, insurance deductible, baby on the way, kid’s school supplies, etc... you don’t need to carry the entire full dollar amount for all of them. Instead, carry enough to cover your own risk-adjusted value. This is a very personal thing, so find your own comfort zone, but the basic concept here is that you absolutely can find ways to both be safe AND maximize returns. This is also why financing is healthy and good: having a $100k line of credit that you don’t use is a good way to buffer a series of huge expenses while you transfer assets around to give yourself enough liquidity.
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Sep 23, 2019 15:27
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For a car a good way to do it is to to pay your "monthly payment" into your savings if you have a paid off car. You keep doing this and you will have cash on hand for the next car (allowing you to decide about financing or not).
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Sep 23, 2019 15:39
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spwrozek posted:For a car a good way to do it is to to pay your "monthly payment" into your savings if you have a paid off car. You keep doing this and you will have cash on hand for the next car (allowing you to decide about financing or not). This is sort of what I'm doing, I have my eye on a couple of more expensive cars (recent promotion) but I want to make sure I can *actually* afford it, so I'm paying the difference between my current payment and the estimated new payment into a separate account.
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Sep 23, 2019 15:42
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don't be underwater on the car, but i just got a car note for 1.9% 60 mos using manufacturer financing - so that means that even in my HYSA i'm still profiting slightly from the financing.
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Sep 23, 2019 16:11
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KYOON GRIFFEY JR posted:don't be underwater on the car, but i just got a car note for 1.9% 60 mos using manufacturer financing - so that means that even in my HYSA i'm still profiting slightly from the financing. This is being pedantic but are you sure this is true following taxes?
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Sep 23, 2019 18:05
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KYOON GRIFFEY JR posted:don't be underwater on the car, but i just got a car note for 1.9% 60 mos using manufacturer financing - so that means that even in my HYSA i'm still profiting slightly from the financing. Through manufacturer financing or CU or what? I’m looking at a similar term but in my area the best CU rates I’m seeing are like 3.4% with 800+ FICO. Even Honda Financial doesn’t want to do less than 3.9% for 60 months
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Sep 23, 2019 18:05
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One thing to be careful about is sometimes dealers give special financing or cash-back. Make sure you’re not paying more for the car just to get a low rate.
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Sep 23, 2019 18:17
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Are there any basic rules for balancing savings/loans/retirement? I have a car loan (3%) and student loans (4.9%) which I am paying steadily. I have ~6 months worth of expenses saved, no credit card debt, and excellent credit. My job just started offering retirement (no matching yet) so I figure I should shift some of my monthly savings contribution into savings but also some into paying down my student loans faster than minimum payments. Related: is it ever worth it to use savings to pay off loans all at once?
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Sep 24, 2019 02:07
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Pedestrian Xing posted:Are there any basic rules for balancing savings/loans/retirement? I have a car loan (3%) and student loans (4.9%) which I am paying steadily. I have ~6 months worth of expenses saved, no credit card debt, and excellent credit. My job just started offering retirement (no matching yet) so I figure I should shift some of my monthly savings contribution into savings but also some into paying down my student loans faster than minimum payments. Related: is it ever worth it to use savings to pay off loans all at once? At 4.9% it may be worth paying off the loans first before you do any retirement savings. What's the balance on the student loans and how much is your 6 months of expenses? Depending on if you are comfortable at keeping less than 6 months expenses on hand for a little while, it may make sense to pay the loans off immediately.
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Sep 24, 2019 02:59
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howdoesishotweb posted:This is being pedantic but are you sure this is true following taxes? Eh it’s close now, you might be right that I’m a little under but from a time value of money perspective I am significantly ahead and I expect to do bette than HYSA with the rates.
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Sep 24, 2019 03:05
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chupacabron posted:Through manufacturer financing or CU or what? I’m looking at a similar term but in my area the best CU rates I’m seeing are like 3.4% with 800+ FICO. Even Honda Financial doesn’t want to do less than 3.9% for 60 months Manufacturer, Volkswagen Credit.
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Sep 24, 2019 03:06
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I'm trying to work out some naive budget projections. If I have, say, $300k in index funds (assuming making 4% over inflation each year) and am making (fixed) mortgage payments of $2000/month for the next 10 years, would the correct math formula to determine where I'd stand after the mortgage is paid off be: 300000 * 1.04^8 - 2000 * 10 * 12 ? Assuming that's correct, then is there anything particularly wrong with thinking about things in those terms, beyond of course that the actual market returns on an index fund are not going to be that stable and might not be that high?
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Oct 1, 2019 04:22
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