How to invest/grow my money?

[BLS 314]

I have a sizeable amount of liquid cash each month.

Our bills, including debt (House only) come to approx $4,500/mo.  That's everything.

My wife and I max out our Roth 401k's.  I max out a Simple IRA, my HSA and we put another $25k annually into our brokerage.

We owe $140k on our house that's got about 11 years on a 15 year note remaining.  3.25% rate.

We have $13k in an emergency fund, and another 3k in a vacation fund.

 

I know I'm gonna get a bunch of dumb replies here, but I'm hoping to get some good feedback on other ways to invest the remaining money.  Pay off the house or invest?

I tend to find that if I don't have a "home" for excess money, it just tends to get spent one way or another.

[IGotWorms 4,057]

Acquire rental properties. Get a cash flow from that and then after 15-30 years when they’re paid off you’re sitting on substantial assets you own free and clear

[Mike Honcho 5,084]

 

[Mike Honcho 5,084]

3 minutes ago, BLS said:

 

 

I know I'm gonna get a bunch of dumb replies here, but I'm hoping to get some good feedback on other ways to invest the remaining money.  Pay off the house or invest?

 

I'm glad I didn't let you down.  

[avoiding injuries 1,505]

Do not pay off a 3.25% mortgage. Over time you should make significantly more, even without the tax break. 

[BLS 314]

1 minute ago, IGotWorms said:

Acquire rental properties. Get a cash flow from that and then after 15-30 years when they’re paid off your sitting on substantial assets you own free and clear

1.  Thought about it.  First off, I know jack about rentals. 

2.  I don't do debt.  So I'd have to save up to buy a rental.  

[BLS 314]

1 minute ago, Mike Honcho said:

I'm glad I didn't let you down.  

You never let me down, boo.

[BLS 314]

Just now, avoiding injuries said:

Do not pay off a 3.25% mortgage. Over time you should make significantly more, even without the tax break. 

Agreed.  However, there is peace in knowing they can't take your home should something shitty happen.

[IGotWorms 4,057]

 

[BufordT 425]

I'm not trying to be a jerk, but it looks like you guys are putting away more than enough money to live comfortably in retirement.  Live a little while you're young-ish.  Spend the extra money on vacations or a new hobby or whatever.  

[BLS 314]

1 minute ago, BufordT said:

I'm not trying to be a jerk, but it looks like you guys are putting away more than enough money to live comfortably in retirement.  Live a little while you're young-ish.  Spend the extra money on vacations or a new hobby or whatever.  

I don't think that's being a jerk.  It's a honest response.

I would agree to an extent, however, the more I invest now, the earlier I can retire.

So there's a double-edged sword here.  I can 'live' and enjoy myself a bit (something my wife says I need to do more often) or I can invest more and retire earlier.

 

[supermike80 1,796]

11 minutes ago, BLS said:

I have a sizeable amount of liquid cash each month.

Our bills, including debt (House only) come to approx $4,500/mo.  That's everything.

My wife and I max out our Roth 401k's.  I max out a Simple IRA, my HSA and we put another $25k annually into our brokerage.

We owe $140k on our house that's got about 11 years on a 15 year note remaining.  3.25% rate.

We have $13k in an emergency fund, and another 3k in a vacation fund.

 

I know I'm gonna get a bunch of dumb replies here, but I'm hoping to get some good feedback on other ways to invest the remaining money.  Pay off the house or invest?

I tend to find that if I don't have a "home" for excess money, it just tends to get spent one way or another.

Maybe think about buying into an annuity.  Depending on the cash you have socked away.

[Strike 5,182]

I've told people this repeatedly.  Buy a book called "all about asset allocation" by Richard Ferri.  It will give you a basic understanding of asset allocation so you can invest.  Then open an account at Vanguard and invest in ETFs based upon the asset allocation the book helps you create.

[thegeneral 2,882]

Seems like all is good. You have a lot going into the market so maybe transfer some of the brokerage money into properties. 

All in all just keep it up. Congrats.

[Horseman 2,353]

12 minutes ago, BufordT said:

I'm not trying to be a jerk, but it looks like you guys are putting away more than enough money to live comfortably in retirement.  Live a little while you're young-ish.  Spend the extra money on vacations or a new hobby or whatever.  

You're assuming a set age/time for retirement.  The goal really is being independently wealthy, then you can do whatever you want to do.  Putting more away now makes that happen sooner.

That being said I wouldn't sacrifice the things you mention; vacations, hobbies.  Just be smart about it.  Be creative for cheaper vacations and save the exotic and expensive places until after you're wealthy.

[Horseman 2,353]

27 minutes ago, BLS said:

I have a sizeable amount of liquid cash each month.

Our bills, including debt (House only) come to approx $4,500/mo.  That's everything.

My wife and I max out our Roth 401k's.  I max out a Simple IRA, my HSA and we put another $25k annually into our brokerage.

We owe $140k on our house that's got about 11 years on a 15 year note remaining.  3.25% rate.

We have $13k in an emergency fund, and another 3k in a vacation fund.

 

I know I'm gonna get a bunch of dumb replies here, but I'm hoping to get some good feedback on other ways to invest the remaining money.  Pay off the house or invest?

I tend to find that if I don't have a "home" for excess money, it just tends to get spent one way or another.

The best bang for your buck is the HSA because it's pre-tax, grows tax free and isn't taxed in retirement.   It's really the only investment vehicle where you never pay any kind of tax.  Do not use the HSA for paying medical bills.  Pay in cash and save the receipts.  With the receipts you can reimburse yourself at anytime, i.e in retirement after all that money has grown tax free for many years.

You didn't mention a Roth IRA (not 401k).  If you don't have any other retirement accounts outside of employer (401k, Simple) you should be doing another $6,500 ($7,500 if over 50), a year into a regular Roth IRA.  If you exceed the income limits you can still do it via Backdoor Roth (contribute to IRA then simply convert it to a Roth IRA).  If both you and your wife can do it, that's another $13,000 per year ($15,000 if over 50).

If you have existing IRAs outside of employer you likely don't want to do a Backdoor Roth because your tax liability upon conversion is calculated on the sum of all your IRAs.  But you can still do a regular IRA contribution with the same amounts described above.

Those two are no brainers.  The next and biggest thing is asking/finding out if your employer has an After-tax 401K option.  There isn't any reason they can't offer them, most just don't or are unaware.  That way instead of investing your extra 25K (you can do up to 43K as explained below) into a brokerage account you could have your employer take it out of your paycheck after tax into After-tax 401K.  Then, simply do a conversion from After-Tax 401K into a regular Roth IRA like the backdoor explained above.  That's called a MegaBackdoor Roth (google it).  Total contribution to 401K is $66,000 ($73,500 if over 50).  So the breakdown is as follows per person if you both are working and have the investment vehicles available.

$22,500 Roth 401K

$43,500 ($66,000 minus $22,500 already contributed above) After Tax 401k rolled over into a Roth IRA (MegaBackdoor)

$7,500 Roth IRA (Backdoored if needed)

$7,750 HSA (note catchup for HSA doesn't start until age 55)

TOTAL: $81,250/year ($88,750 if over 50)

The best part is that you'll never pay capitol gains tax on any of it because it's all sheltered inside a Roth or HSA.  

If you can get the After-tax 401k option from your employer but can't afford $43,500 a year you might consider selling your brokerage account to pay yourself while putting your paycheck through the After-tax into Roth.  Effectively moving your brokerage account under the Roth shelter.  

[Horseman 2,353]

1 hour ago, BLS said:

Agreed.  However, there is peace in knowing they can't take your home should something shitty happen.

I don't have a mortgage.  I wouldn't however pay it off with interest rates as high as they are now.  You have safe sure fire returns that are better than what you're being charged.  Once that equals out I wouldn't blame you for paying off the mortgage.  Overall less risk.  

[iam90sbaby 2,472]

Build a time machine, go back to 2017 and listen to me when I said invest in crypto 

[BLS 314]

37 minutes ago, Horseman said:

The best bang for your buck is the HSA because it's pre-tax, grows tax free and isn't taxed in retirement.   It's really the only investment vehicle where you never pay any kind of tax.  Do not use the HSA for paying medical bills.  Pay in cash and save the receipts.  With the receipts you can reimburse yourself at anytime, i.e in retirement after all that money has grown tax free for many years.

You didn't mention a Roth IRA (not 401k).  If you don't have any other retirement accounts outside of employer (401k, Simple) you should be doing another $6,500 ($7,500 if over 50), a year into a regular Roth IRA.  If you exceed the income limits you can still do it via Backdoor Roth (contribute to IRA then simply convert it to a Roth IRA).  If both you and your wife can do it, that's another $13,000 per year ($15,000 if over 50).

If you have existing IRAs outside of employer you likely don't want to do a Backdoor Roth because your tax liability upon conversion is calculated on the sum of all your IRAs.  But you can still do a regular IRA contribution with the same amounts described above.

Those two are no brainers.  The next and biggest thing is asking/finding out if your employer has an After-tax 401K option.  There isn't any reason they can't offer them, most just don't or are unaware.  That way instead of investing your extra 25K (you can do up to 43K as explained below) into a brokerage account you could have your employer take it out of your paycheck after tax into After-tax 401K.  Then, simply do a conversion from After-Tax 401K into a regular Roth IRA like the backdoor explained above.  That's called a MegaBackdoor Roth (google it).  Total contribution to 401K is $66,000 ($73,500 if over 50).  So the breakdown is as follows per person if you both are working and have the investment vehicles available.

$22,500 Roth 401K

$43,500 ($66,000 minus $22,500 already contributed above) After Tax 401k rolled over into a Roth IRA (MegaBackdoor)

$7,500 Roth IRA (Backdoored if needed)

$7,750 HSA (note catchup for HSA doesn't start until age 55)

TOTAL: $81,250/year ($88,750 if over 50)

The best part is that you'll never pay capitol gains tax on any of it because it's all sheltered inside a Roth or HSA.  

If you can get the After-tax 401k option from your employer but can't afford $43,500 a year you might consider selling your brokerage account to pay yourself while putting your paycheck through the After-tax into Roth.  Effectively moving your brokerage account under the Roth shelter.  

Great info.  HSA is maxed.  Wife doesn't have one, so we can't do that.

I can't do a standard Roth IRA anymore as my income is much too high for it, but the Megaback door Roth is on the options list.  Need to talk to employer about it.

[BLS 314]

31 minutes ago, iam90sbaby said:

Build a time machine, go back to 2017 and listen to me when I said invest in crypto 

I did.  I'm also going to consider continuing to dump say $500/mo into more Bitcoin and Ethereum but it won't be a primary investment and is more of a 'home run' investment.

[Horseman 2,353]

9 minutes ago, BLS said:

Great info.  HSA is maxed.  Wife doesn't have one, so we can't do that.

I can't do a standard Roth IRA anymore as my income is much too high for it, but the Megaback door Roth is on the options list.  Need to talk to employer about it.

You can.  You simply contribute to an IRA, then call the bank the next day and tell them to convert it to a Roth IRA.

As long as you don't have any other IRAs (besides the Roth) the conversion doesn't have any tax implications.  

https://www.google.com/search?q=backdoor+roth+conversion&rlz=1C1GCEA_enCA910CA910&oq=backdoor+roth&gs_lcrp=EgZjaHJvbWUqDQgCEAAYgwEYsQMYgAQyCggAEAAYsQMYgAQyBggBEEUYOTINCAIQABiDARixAxiABDIHCAMQABiABDIHCAQQABiABDIHCAUQABiABDIHCAYQABiABDIHCAcQABiABDIHCAgQABiABDIHCAkQABiABNIBCDkxOTBqMGo5qAIAsAIA&sourceid=chrome&ie=UTF-8

[Cdub100 3,824]

Do the opposite of @edjr

[JustinCharge 2,397]

Liquid cash like Nighttrain?

[Horseman 2,353]

2 hours ago, BLS said:

Our bills, including debt (House only) come to approx $4,500/mo.  That's everything.

I tend to find that if I don't have a "home" for excess money, it just tends to get spent one way or another.

The first sentence indicates that you know your budget.  The second indicates you don't stick to the budget if you have extra cash.  Do you track all of your spending?  Just tracking something often yields improvements.  Plus you need to know your spending as it's an input to a cash flow analysis that determines if you are able to retire/independently wealthy.  

After tracking spending for years and having plenty of cash I don't really think of it as a budget, it's more of an expected spend based on lifestyle history.  Tracking spending month to month and year to year keeps you from just spending excess money because everything is tracked and has a bucket.  It becomes second nature to either allocate that money for something that is planned for or it gets invested. 

This is really the most important step in money management.  

 

[Horseman 2,353]

3 hours ago, Strike said:

I've told people this repeatedly.  Buy a book called "all about asset allocation" by Richard Ferri.  It will give you a basic understanding of asset allocation so you can invest.  Then open an account at Vanguard and invest in ETFs based upon the asset allocation the book helps you create.

  Added to my reading list.

Meeting with my financial advisor Friday morning to talk solely about asset allocation.  I've become more diversified with every new investment over the years but I still feel like I need a better understanding of all the sectors and markets.  I have a sizable amount that is just sitting in money markets and CDs taking advantage of 5%+ interest right now that is eventually going to need to go somewhere.  

[GutterBoy 2,898]

3 minutes ago, Horseman said:

  Added to my reading list.

Meeting with my financial advisor Friday morning to talk solely about asset allocation.  I've become more diversified with every new investment over the years but I still feel like I need a better understanding of all the sectors and markets.  I have a sizable amount that is just sitting in money markets and CDs taking advantage of 5%+ interest right now that is eventually going to need to go somewhere.  

But he doesn't have $1K to bet on something he's 100% sure will happen

[Horseman 2,353]

1 minute ago, GutterBoy said:

But he doesn't have $1K to bet on something he's 100% sure will happen

Bored of the tranny threads today that you have to come seeking attention?

High interest rates are wonderful for people who have more money than they know what to do with.  

Does Tiny have any investing advise?  Pffftlolol

[League Champion 1,896]

4 hours ago, IGotWorms said:

Acquire rental properties. Get a cash flow from that and then after 15-30 years when they’re paid off you’re sitting on substantial assets you own free and clear

.   THIS 

When I was in the Military my Wife and I bought a house almost everywhere I was stationed. Whenever reassigned to another base we would just rent it to incoming soldiers or DOD. 

So we were living in a beautiful house on base for free, while having a huge income from all of our rentals. 

So be smart, invest in property, live mortgage free. 

 

[IGotWorms 4,057]

 

[edjr 6,578]

buy and crash a dodge charger and sell it for parts

[League Champion 1,896]

2 minutes ago, edjr said:

buy and crash a dodge charger and sell it for parts

Lee C. 

 

[Horseman 2,353]

On 8/23/2023 at 7:58 AM, Strike said:

I've told people this repeatedly.  Buy a book called "all about asset allocation" by Richard Ferri.  It will give you a basic understanding of asset allocation so you can invest.  Then open an account at Vanguard and invest in ETFs based upon the asset allocation the book helps you create.

Bought this but haven't read it yet because I bought Just Keep Buying by Nick Maggiulli at the same time and cant put it down. Really good.  

[frank 2,276]

WAFFLES!

 

[mmmmm...beer 790]

Honestly... the S&P500 index fund.

It has averaged 12% /yr since inception somewhere around 1957.

Vanguard founder (dead) John Bogle said everyone tries to beat the market ie SP500 and it really long term can't be done.

Mess around with some financial calculators, my favorite is the compounding interest one at investor.gov here:

https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

Put in whatever you have right now say $5000... plus whatever you'll put in a month say $1000.  Then say 20 years for a time frame @ 10% +/-3%.

Straight math.. but yeah.