30, debt-free and looking to invest $500-$1,000/month
I'm 30, debt-free, make max contributions to my Roth IRA and 401(k) and have six months of living expenses in a high-yield online savings account. I live frugally and am gainfully employed. At this stage, I'd like to take my saving to the next level by investing $500 to $1,000 a month. Ideally would avoid fees and research/active oversight. Would love to hear your thoughts on some secure, high return options!
As a side note, I'd like to buy a house and start a family within the next five years, but my partner and I are saving for that separately. This would be for my personal savings and maybe early retirement if possible. Thanks so much!
Sun Jan 24, 2016 5:12 pm
oldguy Senior Member
Cash: $ 716.00
Joined: 21 May 2006
quote: make max contributions to my Roth IRA and 401(k) and have six months of living expenses in amake max contributions to my Roth IRA and 401(k) and have six months of living expenses in a high-yield online savings account. account.
What is the financial goal, say at about age 60?
Right now, your $23,000/yr in the 401k & roth will be slightly over $5,000,000 at age 60 if you are investing in the generic stock market at 11%/yr. That may be enough? But if you want to invest $6000 to $12,000/yr more, I would use the SP500 Index Fund - all fund companies have one, Vanguard is VFIAX, Fidelity is FUSEX, to name a couple.
The term "high-yield online savings" is an oxymoron, untrue. Another equally deceptive term in the industry is 'high yield bonds", they used to be called junk bonds.
quote: Would love to hear your thoughts on some secure, high return options!
Unfortunately, you can't have both. The Law of investing - "risk & return are directly proportional". So you have to select the risk level that you desire. The power of compounding is extremely 'time' dependant - so it is good select a higher risk during your wealth-building years , and select a lower risk during your wealth-preservation years.
Re real estate. What I have done over the past 40 years with both our home and our 4 rental houses is keep them fully mortgaged - and invest the house equity into the 11%/yr SP500 Funds. That has worked well - eg, refi and borrow an extra $50k on a rental for 30 yrs. That costs about $100,000. Invest the $50k at 11%/yr for 30 yrs, that equals $1,100,000. So, IMO, make a minimal down payment and retain the use of your capital for investing.
Sun Jan 24, 2016 6:54 pm
Cash: $ 380.45
Joined: 09 Feb 2009
Since you stated that your debt free and would like to buy a house within the next 5 years and could save $1,000 a month extra. Why not save for the next 5 years and you'd have 60k to put as a DP on a house leaving you with a low mortgage payment each month, no PMI, a place to lay your head, possible appreciation in a safe manner, and extra disposable cash each month to continually pay off the mortgage on a 10 year note. After 15 years you have a paid for house, continuing to max out your Roth's and 401k's and $1,000 a month to do anything you so desire. And as Old Guy stated you could have 5 million for retirement in Roths' and 401k's. Not a bad situation to be in.
Risk comes from not knowing what you're doing. (Warren Buffet)