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lostone
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So I will be debt free July next year. First thing I am doing is house work that should cost no more than 10k. This includes a shower regrout and maybe new carpet. We may also have to ceiling scape and paint which may put us to 15k. After that moving to a 50k emergency fund. How should we invest our money if we are going buy a house 6-7 years after the emergency fund is built. We will be increasing Roth contributions to 10% for each of us. And I refuse to have any more than that sitting and not making money...

Any tips?

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Your emergency fund is WAY too big. $50k sitting there doing nothing towards building wealth is a waste. Take the bills for your monthly necessities, multiply it by 6, and that is your emergency fund. 6 months worth of bills in a savings is more than enough. If you can't find a job in 4-5 months, take a loan against your 401k/Roth or sell stocks if that's the way you choose to go.

For example, if you only need $20k emergency, investing the other $30k over 20 years at 10% is over $200k. Keeping extra cash on hand is not bad if you are saving up to buy something, but that's not your emergency money.

Before investing on your own, max out all retirement accounts. 401k and Roth IRA max every year. Some people prefer the IRA because of the tax savings now, thinking their bracket will be lower in retirement. I used to prefer Roth because I can withdraw tax exempt including growth. I don't qualify anymore, so I'm doing the IRA. If you have kids, max out their tax deductible college fund as well.

After all of that, if you have more to invest, you can try real estate or the stock market. The stock market outperforms real estate as far as averages go. But if you are trading individual stocks, that's a helluva lot riskier than real estate. If you choose real estate, multi-unit buildings are hard work with small initial returns, but they will make you a lot of money over time.

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Sounds about what I have heard. The reasons we would have so much is due to the other person with veto power. It will be hard to convince her that it makes no sense to keep that much in savings. I have a 401k and will start contributing to the roth 401k once this debt is paid off. We want to buy our final house 7-8 years from now and we need a significant down payment for me to be happy (so I am looking at 150k down). I want to put this money in investments. Unfortunately bonds suck and I feel we are in for a downturn soon in stocks. So I feel like I will have to stockpile money for 7 years and I dont know how well to asset mix to get the most bang for my bucks. This short term goal is what is hindering my judgement. If bonds were at 3 or 4% I'd probably be spread 50-50 and would feel relatively safe, but now... it feels like I should be 100% index funds and hope for the best.

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Sounds about what I have heard. The reasons we would have so much is due to the other person with veto power. It will be hard to convince her that it makes no sense to keep that much in savings. I have a 401k and will start contributing to the roth 401k once this debt is paid off. We want to buy our final house 7-8 years from now and we need a significant down payment for me to be happy (so I am looking at 150k down). I want to put this money in investments. Unfortunately bonds suck and I feel we are in for a downturn soon in stocks. So I feel like I will have to stockpile money for 7 years and I dont know how well to asset mix to get the most bang for my bucks. This short term goal is what is hindering my judgement. If bonds were at 3 or 4% I'd probably be spread 50-50 and would feel relatively safe, but now... it feels like I should be 100% index funds and hope for the best.

If you fear a downturn, go towards medium-low risk funds. They are better at investing your money than you are unless you are doing a ton of research. You are in it for the long-haul. You only lose money when you sell low. If the downturn hits, you will lose some value, but nothing near what the overall market did. If it doesn't downturn, then you will make some return on your investment. The longer you wait without a crash, the more money you lose. People said the same a year ago and the one's who kept investing made another 30%. The one's who didn't are sitting on their same savings. And when the crash does happen, 1 year, 5 years, whenever, it's going to be offset by the gains in that time. If the crash does hit, you'll also have money in the market you can move from medium-low risk to high risk, because it always comes back and you get to ride the wave up. If you are sitting on cash, you are more likely to spend it and less likely to invest it all at once due to the risk and shock value watching all of that cash get gambled. Waiting to invest is waiting to get a return, or waiting to find something to waste it on.

The 10th biggest crash in history was the market dropping 8.5% in one day. That's a big drop, but it's not like the crash happens overnight without a HUGE disaster (WTC). If the market does crash, it will come back, so move everything into high risk and you will come back stronger.

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So would you do a 50 50 split stocks to bonds for a short term (7-8 year) investment? I am concerned about bonds right now and basically everyone is praying that inflation stays where it is." I will probably just ride the market with a sp 500 index fund

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So would you do a 50 50 split stocks to bonds for a short term (7-8 year) investment? I am concerned about bonds right now and basically everyone is praying that inflation stays where it is." I will probably just ride the market with a sp 500 index fund

Sorry, I cannot give you specific advice. I can give you a high level strategy that works for me, but the specifics you should come up with yourself as you feel comfortable. I do not like to tell people to buy this or sell that, nor do I want to tell them how to split it. If I do and you lose a bunch of money because it's either misinterpreted or you end up with the worst timing in the history of the markets, I do not want to accept blame. I only accept blame for my own losses.

The other problem is it really depends on how much work you want to put into your portfolio. I don't want to put much work into it, as I primarily put my work into my career. I tend to go with Mutual Funds that have a balanced investment approach, something similar to what I would do if I was doing all of the research. I also split my investments across several different funds. Some outperform others and I change my investment in those funds accordingly or try new ones, but I still try to maintain some level of balance across them so I am not riding a single ship. It's a lot more work if you want to balance your own specific investments. You can also look at the historical performance to see what those funds did during a crash versus how they performed on the uptick. That is the way I would go for a novice that doesn't have the time to do that much research.

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Honestly, stop seeking financial advice from total strangers on an off topic message board and sit down with a financial advisor! The first thing they'll do is point out some obvious flaws in your strategy, but they need to be the one's telling you this, not me. Again, sitting down with a pro should be your first step!!!

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So I will be debt free July next year. First thing I am doing is house work that should cost no more than 10k. This includes a shower regrout and maybe new carpet. We may also have to ceiling scape and paint which may put us to 15k. After that moving to a 50k emergency fund. How should we invest our money if we are going buy a house 6-7 years after the emergency fund is built. We will be increasing Roth contributions to 10% for each of us. And I refuse to have any more than that sitting and not making money...

Any tips?

15% into the Roths...

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15% into the Roths...

Roth contributions are capped. 15% would not be possible if you make more than $42k per year. General rule of thumb, the first 2 things a person should do is max out the contribution to their 401k and IRA/Roth. If you are not able to max those out, then I don't see why you would invest elsewhere that doesn't have the tax benefits unless it's your own private business.

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Honestly, stop seeking financial advice from total strangers on an off topic message board and sit down with a financial advisor! The first thing they'll do is point out some obvious flaws in your strategy, but they need to be the one's telling you this, not me. Again, sitting down with a pro should be your first step!!!

This also works for people seeking legal advice on this board.

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Roth contributions are capped. 15% would not be possible if you make more than $42k per year. General rule of thumb, the first 2 things a person should do is max out the contribution to their 401k and IRA/Roth. If you are not able to max those out, then I don't see why you would invest elsewhere that doesn't have the tax benefits unless it's your own private business.

That's right, I forgot about the limit. Yep, I'd max out the Roth and then the 401k and then good old mutual funds after that...

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Honestly, stop seeking financial advice from total strangers on an off topic message board and sit down with a financial advisor! The first thing they'll do is point out some obvious flaws in your strategy, but they need to be the one's telling you this, not me. Again, sitting down with a pro should be your first step!!!

I will probably end up at a fee only advisor. I just don't think bonds are a good midterm bet. I'd be 50/50 otherwise. With the way things are, I'll be 100% in stocks across 2 index and one active fund... Probably a value fund.

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I will probably end up at a fee only advisor. I just don't think bonds are a good midterm bet. I'd be 50/50 otherwise. With the way things are, I'll be 100% in stocks across 2 index and one active fund... Probably a value fund.

Then my work is done! Just don't want to see you apply a "one size fits all" approach to your investing without sitting down with a pro and knowing your options AND the pros and cons of each as it applies to your situation. Good luck and I hope you reach your goal!

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Nah, a chick with a crew cut

I found out the hard way that if you see a good looking woman hanging out with a biker chick, don't hit on the good looking woman because she is more than likely the girlfriend of the biker chick and the biker chick will get upset and assault you

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