250k in savings. need some advice and a kick in the butt

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hardworknoplay
Posts: 17
Joined: Wed Aug 02, 2017 7:52 pm

250k in savings. need some advice and a kick in the butt

Post by hardworknoplay » Wed Aug 02, 2017 8:02 pm

Hi Folks,
first time to this forum.
it appears to be a wealth of knowledge so excited to be here.

some info on me:

35 years old . last year gross income 200k. wife makes 80k. combined at 280k.
we both have 401k through work and are maxing it out.
i have an IRA with about 25k that was rollover from old job.

i have about 250k in savings that i am unsure what to do with. it is currently sitting in high yield savings accounts earning 1.25.i have been scared and passive to really play the stock market because i just dont feel knowledgeable enough about individual stocks and i dont trust the artifically inflated market.

my job is reliable and i am somewhat risk adverse. i am thinking about investing some of the 250k into mutual funds. a buddy recommended one that is earning about 20% annual return this year and 7% over the last 10 years.

my question is:

1)should i invest into something else? if so, what do you recommend?
2)how much of the 250k would you invest in funds or something else
3)any options to help bring down my adjusted gross income to help with the tax man? :) he is reaming me, but alas, it is the nature of the beast when you start making real money.

i am debt free (paid off school loans 2 years back), and carry a mortgage and 2 car loans.

I appreciate all feedback.

mega317
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Re: 250k in savings. need some advice and a kick in the butt

Post by mega317 » Wed Aug 02, 2017 9:11 pm

OK a lot to unpack here.
i have been scared and passive to really play the stock market because i just dont feel knowledgeable enough about individual stocks and i dont trust the artifically inflated market.
Don't "play" the market, invest in it long-term. Buy and hold. Do not pick individual stocks. What do you mean artificially inflated?
a buddy recommended one that is earning about 20% annual return this year and 7% over the last 10 years.
1. Past performance does not predict future returns. 2. Don't take advice from "buddies" or anyone else including us, without fully understanding what you are investing in and why.
1)should i invest into something else? if so, what do you recommend?
Total stock market and total bond market index funds. There are a number of ways to do this. I think we need a more complete picture of your current situation before giving more specific recommendations.
2)how much of the 250k would you invest in funds or something else
I would invest all of it in mutual funds, except I would keep in cash enough for an emergency fund and maybe some more for anticipated large expenses in the near future.
3)any options to help bring down my adjusted gross income to help with the tax man? :) he is reaming me, but alas, it is the nature of the beast when you start making real money.
Once you max out 401ks you've done a lot of the work. Other options are high-deductible health plan, health/childcare flexible spending accounts, donations if you itemize.

Please search "asking portfolio questions" as we need more information.

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welderwannabe
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Re: 250k in savings. need some advice and a kick in the butt

Post by welderwannabe » Wed Aug 02, 2017 9:20 pm

I didn't see any details on the mortgage. May make sense to pay off some principal if you are risk averse as you state.

Also, risk averse means different things to different people. To me that usually means someone that wants to be 60/40 or 50/50.

At that income your gonna be in the 33% tax bracket, so you want to watch your tax exposure in a taxable account.

So based on these things, assuming you want something easy to invest in, that is good on taxes, take a look at Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX). It is roughly 50% stocks, 50% municipal bonds. Very conservative and the bond dividends it pays out are Federal tax free.

If you don't mind a little work and periodic rebalancing you can roll your own with a standard 3 fund portfolio https://www.bogleheads.org/wiki/Three-fund_portfolio but make sure for the bonds you use municipal bonds. I would suggest
Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX) for the bond portion.

Which is better, the Single balanced fund or the 3-Fund portfolio? Whichever ones gets you in the market!
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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Watty
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Re: 250k in savings. need some advice and a kick in the butt

Post by Watty » Wed Aug 02, 2017 9:25 pm

Chasing some "hot" fund usually does not work out well.

Something like a three fund portfolio is one of the standard recommendations.

https://www.bogleheads.org/wiki/Three-fund_portfolio

https://www.bogleheads.org/wiki/Tax-eff ... _placement

There is a getting started wiki if you have not seen it.

https://www.bogleheads.org/wiki/Getting_started
hardworknoplay wrote:i have about 250k in savings that i am unsure what to do with.......
it is currently sitting in high yield savings accounts earning 1.25....
i have been scared .....
i dont trust the artifically inflated market......
i am somewhat risk adverse. .......
carry a mortgage and 2 car loans.
Pay the cars off right away even if the loans are at 0%. Having that money in your savings account will make you feel richer than you are. Once the cars are paid off then keep making your "car payment" to a separate account in order to be able to pay cash for your next car.

There are all sorts of opinions about paying off a mortgage or not but would be nothing wrong with using the money to pay down your mortgage. If it is not enough to comfortably pay off your mortgage then you can call your lender and ask if they will "recast your mortgage"(Google this) if you make a large prepayment. The are not required to do this but they usually will for a processing fee of a few hundred dollars. The way this works is if pay down your mortgage by 50%(or some other percentage) then your required mortgage payment will be reduced by the same percentage. The interest rate and length of the mortgage will stay the same. This could be important in case you are disabled or if interest rates go up a lot. The money that would have been used for the mortgage payment can then be invested each month so that you will get the benefits of dollar cost averaging.

https://www.bogleheads.org/wiki/Dollar_cost_averaging

Being risk averse if you had a paid off house then you would not take out a $100K mortgage just to invest the money. That is just about the same question.

delamer
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Re: 250k in savings. need some advice and a kick in the butt

Post by delamer » Wed Aug 02, 2017 9:32 pm

welderwannabe wrote:I didn't see any details on the mortgage. May make sense to pay off some principal if you are risk averse as you state.

Also, risk averse means different things to different people. To me that usually means someone that wants to be 60/40 or 50/50.

At that income your gonna be in the 33% tax bracket, so you want to watch your tax exposure in a taxable account.

So based on these things, assuming you want something easy to invest in, that is good on taxes, take a look at Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX). It is roughly 50% stocks, 50% municipal bonds. Very conservative and the bond dividends it pays out are Federal tax free.

If you don't mind a little work and periodic rebalancing you can roll your own with a standard 3 fund portfolio https://www.bogleheads.org/wiki/Three-fund_portfolio but make sure for the bonds you use municipal bonds. I would suggest
Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX) for the bond portion.

Which is better, the Single balanced fund or the 3-Fund portfolio? Whichever ones gets you in the market!
If they are maxing out 401(k)s and itemizing deductions, they aren't in the 33% federal bracket but the 28%.

They need to decide what the purpose of the $250K is before deciding on an asset allocation. Saving for retirement in 30 years is different than savings for a vacation home in three years.

fundseeker
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Re: 250k in savings. need some advice and a kick in the butt

Post by fundseeker » Thu Aug 03, 2017 5:12 am

As mega317 wrote, you should provide your complete financial picture in order to get the best advice from this forum. And yeah, if you're risk adverse, you should be cautious about entering the market right now, and at least just gradually invest. And, mutual funds are the way to go, not individual stocks. I'd pay off the loans soon. Okay, I will stop now until we get the big picture :happy . Welcome, and that's an awesome income!

BanquetBeer
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Re: 250k in savings. need some advice and a kick in the butt

Post by BanquetBeer » Thu Aug 03, 2017 6:02 am

I'm curious as to the small savings amount compared to the high income. You seem to have quite high spending.

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welderwannabe
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Re: 250k in savings. need some advice and a kick in the butt

Post by welderwannabe » Thu Aug 03, 2017 7:31 am

delamer wrote: If they are maxing out 401(k)s and itemizing deductions, they aren't in the 33% federal bracket but the 28%.
You are probably right. I was going with single and not joint tax brackets. My mistake.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

noco-hawkeye
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Re: 250k in savings. need some advice and a kick in the butt

Post by noco-hawkeye » Thu Aug 03, 2017 8:01 am

BanquetBeer wrote:I'm curious as to the small savings amount compared to the high income. You seem to have quite high spending.
I agree. In addition to maxing out the 401ks, you should be looking at backdoor Roths as well. Even maxing both of these things out, you are around a savings rate of 17%. I'd consider this a fair savings rate, but nothing spectacular. I also agree that you should pay off the cars tomorrow, there is no reason to keep the loans on them outstanding.

At your income level, I would want to max out the 401k and Roth every year, then save a bit more as well... I'd want to save more than 20% of my income (if not higher). You are making good money, you should be making sure some of it sticks around. If you don't like investing in a taxable account, you could also pay down your mortgage more aggressively.

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knpstr
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Re: 250k in savings. need some advice and a kick in the butt

Post by knpstr » Thu Aug 03, 2017 8:04 am

hardworknoplay wrote:i am debt free (paid off school loans 2 years back), and carry a mortgage and 2 car loans.
:confused This makes no sense.
You aren't debt free if you have a mortgage AND 2 car loans.
I mean some people don't count a mortgage but everyone counts car loans.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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ruralavalon
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Re: 250k in savings. need some advice and a kick in the butt

Post by ruralavalon » Thu Aug 03, 2017 9:47 am

Welcome to the forum :) .

It's great to see that you are making the maximum annual contributions to both 401ks. You are wise not to try investing in individual stocks. Congratulations on paying off your student loans.
hardworknoplay wrote:Hi Folks,
first time to this forum.
it appears to be a wealth of knowledge so excited to be here.

some info on me:

35 years old . last year gross income 200k. wife makes 80k. combined at 280k.
we both have 401k through work and are maxing it out.
i have an IRA with about 25k that was rollover from old job.

i have about 250k in savings that i am unsure what to do with. it is currently sitting in high yield savings accounts earning 1.25.i have been scared and passive to really play the stock market because i just dont feel knowledgeable enough about individual stocks and i dont trust the artifically inflated market.

my job is reliable and i am somewhat risk adverse. i am thinking about investing some of the 250k into mutual funds. a buddy recommended one that is earning about 20% annual return this year and 7% over the last 10 years.

my question is:

1)should i invest into something else? if so, what do you recommend?
2)how much of the 250k would you invest in funds or something else
3)any options to help bring down my adjusted gross income to help with the tax man? :) he is reaming me, but alas, it is the nature of the beast when you start making real money.

i am debt free (paid off school loans 2 years back), and carry a mortgage and 2 car loans.

I appreciate all feedback.
A little more information will be helpful.

About how much of the $250k would you like to keep aside as an emergency fund, to cover 3-6 months worth of living expenses?

What is the balance and interest rate on your mortgage note?

What are the balances and interest rates on your car loans?

What is the asset allocation (stock/bond mix; and domestic/international stock mix) that you think you might want to aim for?

What funds are you currently using in each 401k? What are the other funds, offered in each 401k? Please give fund names, tickers and expense ratios.

Is there a High Deductible Health Plan (HDHP) offered at work, so that you could use a Health Savings Account (HSA)?

You can simply add this to your original post using the edit button, it helps a lot if all of your information is in one place.

. . . . .

You could of pay down or pay off the loans and mortgage, if the interest rates are higher that could be your best "investment".

You could open a joint taxable account at a low cost provider like Vanguard,and invest in very tax-efficient stock index funds. Examples would include Vanguard Total Stock Market Index Fund and Vanguard Total International Stock Index Fund.

What funds to use depends on what you are using and what is offered in your 401ks.
Last edited by ruralavalon on Thu Aug 03, 2017 9:53 am, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Tamalak
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Re: 250k in savings. need some advice and a kick in the butt

Post by Tamalak » Thu Aug 03, 2017 9:49 am

i just dont feel knowledgeable enough about individual stocks
i dont trust the artifically inflated market.
You don't know a whole lot about stocks but you sure do know better than the professionals setting the prices with their own money?

Please enlighten me and everyone else, what artifice is inflating the market and how far above the correct valuation is the market right now?

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welderwannabe
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Re: 250k in savings. need some advice and a kick in the butt

Post by welderwannabe » Thu Aug 03, 2017 10:30 am

Tamalak wrote: Please enlighten me and everyone else, what artifice is inflating the market and how far above the correct valuation is the market right now?
People come here for help and advice. I don't think this tone is really helpful. :(
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

Tamalak
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Re: 250k in savings. need some advice and a kick in the butt

Post by Tamalak » Thu Aug 03, 2017 12:54 pm

welderwannabe wrote:
Tamalak wrote: Please enlighten me and everyone else, what artifice is inflating the market and how far above the correct valuation is the market right now?
People come here for help and advice. I don't think this tone is really helpful. :(
I am just eager to learn from someone who actually knows what the correct valuation of the market is. I have never talked to such a person before.

Topic Author
hardworknoplay
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Re: 250k in savings. need some advice and a kick in the butt

Post by hardworknoplay » Thu Aug 03, 2017 1:40 pm

Thank you everyone for the feedback!
Some additonal details.
1)'mortgage is 3.25 30 year fixed. I have 500k left. Have about $550k equity as put down a huge downpayment when we bought it last year.

2)car loans are .9, and 1.9, respectively.
Only owe about $30k combined on loans

3) id like to retire in 10 years. Wishful thinking probably.

Also someone commented on my high income low savings.
I just started making this money about 2-3 years ago and savings were lower because i paid off $200k student loans and made a huge down payment on house.

4) i would like to take have atleast 2 years of emergency fund in case things ever hit bottom.

5) when i say the market is artifically inflated, i am speaking in generalities. Strictly gut feeling sayibg its due for correction. Lol didnt mean to offend

Topic Author
hardworknoplay
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Re: 250k in savings. need some advice and a kick in the butt

Post by hardworknoplay » Thu Aug 03, 2017 1:43 pm

knpstr wrote:
hardworknoplay wrote:i am debt free (paid off school loans 2 years back), and carry a mortgage and 2 car loans.
:confused This makes no sense.
You aren't debt free if you have a mortgage AND 2 car loans.
I mean some people don't count a mortgage but everyone counts car loans.
You are right. I just dont count mortgage as debt. Because u always have to pay to live somewhere. Is being in a lease debt? But i guess people differ on this.

So i guess then i have 500k mortgage debt, and $30k auto loan debt.

I also have $550k equity in home as noted

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hardworknoplay
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Re: 250k in savings. need some advice and a kick in the butt

Post by hardworknoplay » Thu Aug 03, 2017 1:46 pm

BanquetBeer wrote:I'm curious as to the small savings amount compared to the high income. You seem to have quite high spending.
We spend. It comes with territory.
But i save alot actually. Im more along the lines of 30% savings from my take home
Monthly atleast

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Cloudy
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Re: 250k in savings. need some advice and a kick in the butt

Post by Cloudy » Thu Aug 03, 2017 1:48 pm

I agree with welderwannabe. Vtmfx or approximate with vtclx and vwiux. I'd also pay off the cars. :beer

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flamesabers
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Re: 250k in savings. need some advice and a kick in the butt

Post by flamesabers » Thu Aug 03, 2017 1:50 pm

OP,

I would suggest paying off your car loans first and foremost. After that I would suggest investing in a taxable account or else paying down your mortgage. If you have a HDHP, an HSA would make a good investment as well.

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knpstr
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Re: 250k in savings. need some advice and a kick in the butt

Post by knpstr » Thu Aug 03, 2017 2:29 pm

hardworknoplay wrote: You are right. I just dont count mortgage as debt. Because u always have to pay to live somewhere.
That's true.
But you don't always have to pay a mortgage payment. It is a debt you can get rid of.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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Raymond
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Re: 250k in savings. need some advice and a kick in the butt

Post by Raymond » Thu Aug 03, 2017 2:59 pm

Welcome to Bogleheads!

As mentioned above, you and your wife are doing really well by maxing out your 401(k) accounts - what mutual funds do you have them invested in, and what kind of expense ratios do they have? Do you get employer matching funds?

I agree with just paying off the car loans completely, and perhaps making extra principal payments on your mortgage to accelerate the process of paying it off (if that is within your budget.)

As mega317 stated, if you gather your information together and post it in the "Asking Portfolio Questions" format, we can make more relevant suggestions.

Just copy and paste the format into your first post in this thread, and fill in the applicable information. I did this when I joined five years ago, and it was an excellent method to organize my thinking.

Don't worry, you didn't offend us with the "artificially inflated" statement, it's just that no one (even all the high-powered economists who do this for a living) really knows what is the "true value" of the stock market is. As a group, we accept that no one can tell the future, and we just invest steadily, preferably in low-cost index mutual funds, regardless of the noise put out by the "financial pornography" industry.

Just out of curiosity, what mutual fund did your friend recommend? Because the Vanguard 500 Index Investor Fund (VFINX) has also made an annualized 10-year return of 7.52%, but with an expense ratio of only 0.14%.
"Ritter, Tod und Teufel"

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Watty
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Re: 250k in savings. need some advice and a kick in the butt

Post by Watty » Thu Aug 03, 2017 3:06 pm

hardworknoplay wrote:We spend. It comes with territory.
If you cannot deduct the spending as a business expense then that might not be entirely true.
hardworknoplay wrote: I just dont count mortgage as debt. Because u always have to pay to live somewhere.
Normally I would be more polite but in your post subject your asked for "a kick in the butt"

Consider it officially "kicked", ---- big time, ---- around the block and back again, ----- so hard that you can taste my shoelaces.

Back into polite mode. :D

That is very incorrect and a mortgage is pretty much the definition of debt. You mentioned wanting to retire in about ten years and having a large mortgage then will make it painfully clear that it is "debt" when you look at your retirement numbers.
hardworknoplay wrote: 2)car loans are .9, and 1.9, respectively.
Only owe about $30k combined on loans
But you have money in the bank in earning 1.25% in a taxable account which after taxes is earning something like 0.75%

Paying those off is an easy choice.

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hardworknoplay
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Re: 250k in savings. need some advice and a kick in the butt

Post by hardworknoplay » Thu Aug 03, 2017 3:09 pm

Watty wrote:
hardworknoplay wrote:We spend. It comes with territory.
If you cannot deduct the spending as a business expense then that might not be entirely true.
hardworknoplay wrote: I just dont count mortgage as debt. Because u always have to pay to live somewhere.
Normally I would be more polite but in your post subject your asked for "a kick in the butt"

Consider it officially "kicked", ---- big time, ---- around the block and back again, ----- so hard that you can taste my shoelaces.

Back into polite mode. :D

That is very incorrect and a mortgage is pretty much the definition of debt. You mentioned wanting to retire in about ten years and having a large mortgage then will make it painfully clear that it is "debt" when you look at your retirement numbers.
hardworknoplay wrote: 2)car loans are .9, and 1.9, respectively.
Only owe about $30k combined on loans
But you have money in the bank in earning 1.25% in a taxable account which after taxes is earning something like 0.75%

Paying those off is an easy choice.
Thanks. My company gives me a car allowance which i use to pay both car notes. So they are paying the interest really. I should have mentioned that also.

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Watty
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Re: 250k in savings. need some advice and a kick in the butt

Post by Watty » Thu Aug 03, 2017 3:18 pm

hardworknoplay wrote:Thanks. My company gives me a car allowance which i use to pay both car notes. So they are paying the interest really. I should have mentioned that also.
I would assume that you would still get the car allowance if the cars were paid off. If so that makes no difference and paying them off still makes sense because you have so much cash.

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ruralavalon
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Re: 250k in savings. need some advice and a kick in the butt

Post by ruralavalon » Thu Aug 03, 2017 3:21 pm

hardworknoplay wrote:Hi Folks,
first time to this forum.
it appears to be a wealth of knowledge so excited to be here.

some info on me:

35 years old . last year gross income 200k. wife makes 80k. combined at 280k.
we both have 401k through work and are maxing it out.
i have an IRA with about 25k that was rollover from old job.

i have about 250k in savings that i am unsure what to do with. it is currently sitting in high yield savings accounts earning 1.25.i have been scared and passive to really play the stock market because i just dont feel knowledgeable enough about individual stocks and i dont trust the artifically inflated market.

my job is reliable and i am somewhat risk adverse. i am thinking about investing some of the 250k into mutual funds. a buddy recommended one that is earning about 20% annual return this year and 7% over the last 10 years.

my question is:

1)should i invest into something else? if so, what do you recommend?
2)how much of the 250k would you invest in funds or something else
3)any options to help bring down my adjusted gross income to help with the tax man? :) he is reaming me, but alas, it is the nature of the beast when you start making real money.

i am debt free (paid off school loans 2 years back), and carry a mortgage and 2 car loans.

I appreciate all feedback.
hardworknoplay wrote:Thank you everyone for the feedback!
Some additonal details.
1)'mortgage is 3.25 30 year fixed. I have 500k left. Have about $550k equity as put down a huge downpayment when we bought it last year.

2)car loans are .9, and 1.9, respectively.
Only owe about $30k combined on loans

3) id like to retire in 10 years. Wishful thinking probably.

Also someone commented on my high income low savings.
I just started making this money about 2-3 years ago and savings were lower because i paid off $200k student loans and made a huge down payment on house.

4) i would like to take have atleast 2 years of emergency fund in case things ever hit bottom.

5) when i say the market is artifically inflated, i am speaking in generalities. Strictly gut feeling sayibg its due for correction. Lol didnt mean to offend
1-2) The interest rates don't cry out for a rapid payoff. But still consider paying off or paying the loans as a way of decreasing your cash flow needs, especially if you find debt worrisome. Remember that your $250k cash is almost guaranteed to give you a negative real return, net of inflation.

3) If you want to look at retirement in 10 years, then here is a calculator that might help -- http://www.firecalc.com .

4) How much emergency fund is that in dollars? And then how much of the $250k in dollars is available for long-term investing?

5) No offense taken.

. . . . .

Asset allocation.
What is the asset allocation (stock/bond mix; and domestic/international stock mix) that you think you might want to aim for?

I suggest about 20 - 25% in bonds. This is expected to substantially reduce volatility (risk), with only a relatively slight decrease in return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, "Never bear too much or too little risk", and "Asset allocation".

At age35 I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). You can find lots of debate here on international allocation, opinions running from 00% to 50% of stocks in international stocks.

Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.


Funds to use.
What funds are you currently using in each 401k? What are the other funds, offered in each 401k? Please give fund names, tickers and expense ratios.

In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

It is often best to look at all accounts together as a single unified whole, rather than consider each account separately. Start fund selection by choosing only the one or two best funds (diversified + low ER) in the work-based accounts, where the choices offered are limited. Then complete the rest of the asset allocation using the nearly unlimited choices available in the IRAs.

. Low expense ratios are critical to long-term investing performance. Vanguard blog post, "Stopping the silent killer of returns". Please see the table at the end of the post, "Cumulative impact of fees on ending wealth at various time horizons." Also, here is a calculator you could use to estimate the impact of investing expenses. Bankrate.com, "Mutual fund fees calculator".

Also, low expense ratios are the best predictor of future performance. Morningstar article. “If there's anything in the whole world of mutual funds that you can take to the bank, it's that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds.” “Investors should make expense ratios a primary test in fund selection. They are still the most dependable predictor of performance.”


Priority.
Is there a High Deductible Health Plan (HDHP) offered at work, so that you could use a Health Savings Account (HSA)?

Here is a general account funding priority that often works well for many people (when there is no high interest debt or HSA use):
1) Contribute to the work-based plans (401k, 403b, 457, TSP) enough to get the full employer match (the match is like free money, your best possible investment);
2) Contribute the maximum to an IRA, traditional or Roth, depending on eligibility and personal circumstances;
3) Contribute the remainder of the maximum employee contribution to the 401ks; and
4) Contribute to a taxable investing account.
Please see the wiki article "Prioritizing investments".

A HSA can be a valuable tax-advantaged account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
hardworknoplay
Posts: 17
Joined: Wed Aug 02, 2017 7:52 pm

Re: 250k in savings. need some advice and a kick in the butt

Post by hardworknoplay » Thu Aug 03, 2017 4:37 pm

Watty wrote:
hardworknoplay wrote:Thanks. My company gives me a car allowance which i use to pay both car notes. So they are paying the interest really. I should have mentioned that also.
I would assume that you would still get the car allowance if the cars were paid off. If so that makes no difference and paying them off still makes sense because you have so much cash.
The car allowance is based on what receipts i submit and payments i make. So no payment, no reinbursement

ianferrel
Posts: 192
Joined: Thu May 29, 2008 5:27 pm

Re: 250k in savings. need some advice and a kick in the butt

Post by ianferrel » Thu Aug 03, 2017 5:04 pm

hardworknoplay wrote:
Watty wrote:
hardworknoplay wrote:Thanks. My company gives me a car allowance which i use to pay both car notes. So they are paying the interest really. I should have mentioned that also.
I would assume that you would still get the car allowance if the cars were paid off. If so that makes no difference and paying them off still makes sense because you have so much cash.
The car allowance is based on what receipts i submit and payments i make. So no payment, no reinbursement
Ok, new plan: don't pay off the cars.

BanquetBeer
Posts: 379
Joined: Thu Jul 13, 2017 5:57 pm

Re: 250k in savings. need some advice and a kick in the butt

Post by BanquetBeer » Thu Aug 03, 2017 5:07 pm

Let's erase dollars and use %. Say you now earn 200k and want 100k in retirement and you currently save 30% of 200k.

So if you want 100k = 100% and you save 200k*30%/100k=60% of that every year. I assume 5.5% after inflation growth because if I'm wrong I might have to work for +/- 1 year. Run the calc with your number in excel. P*1.055+0.6

If you want to retire with a high income in 10 years you need to save about 65% per year (starting from 0). (Per http://www.mrmoneymustache.com/2012/01/ ... etirement/)

The million dollar house will probably set you back a lot in your goal. Chances are tax and insurance is > gains. We earn about as much but save closer to 50% gross income (and have less than half the house) I can't imagine how fancy we would live spending another $5k/month - you absolutely have room to reduce expenses and live more than comfortably. All this is pre children!! You had better save now.

I stress about current expenses vs my allowed income. Savings is out of mind in a separate account and while it is nice to check balances and do calcs, I'm detached from it. I'm fine with a crash because I don't need it for 15 years. You need a long term saving vehicle - do you want stocks or rentals? Pick one, pick a robust strategy, and just automate it. Plan to make adjustments about once a year (not a complete change - just adjust).

mega317
Posts: 3062
Joined: Tue Apr 19, 2016 10:55 am

Re: 250k in savings. need some advice and a kick in the butt

Post by mega317 » Thu Aug 03, 2017 5:40 pm

BanquetBeer wrote:Let's erase dollars and use %. Say you now earn 200k and want 100k in retirement and you currently save 30% of 200k.
Household income is actually 280k. That doesn't change your analysis, I only mention it to point out that he's also spending more, so it might be easier to cut spending.

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wander
Posts: 2820
Joined: Sat Oct 04, 2008 9:10 am

Re: 250k in savings. need some advice and a kick in the butt

Post by wander » Thu Aug 03, 2017 9:38 pm

At 35, you should have about 2 times your salary saved in retirement account. You need to save more.

JBTX
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Joined: Wed Jul 26, 2017 12:46 pm

Re: 250k in savings. need some advice and a kick in the butt

Post by JBTX » Thu Aug 03, 2017 10:08 pm

Tamalak wrote:
i just dont feel knowledgeable enough about individual stocks
i dont trust the artifically inflated market.
You don't know a whole lot about stocks but you sure do know better than the professionals setting the prices with their own money?

Please enlighten me and everyone else, what artifice is inflating the market and how far above the correct valuation is the market right now?
While I agree that trying to time the market is a fools errand by almost any historical measure the market is "richly" valued. So I think the caution is warranted. But that doesn't mean you don't invest in equity funds, perhaps you just lighten your allocation a bit over conventional asset allocation percentages.

If you ask somebody conservative with no equities to sink all most of their money in equities and then they tank 50% chances are they'll never invest in the markets again. Better baby steps.

mega317
Posts: 3062
Joined: Tue Apr 19, 2016 10:55 am

Re: 250k in savings. need some advice and a kick in the butt

Post by mega317 » Fri Aug 04, 2017 4:12 am

wander wrote:At 35, you should have about 2 times your salary saved in retirement account. You need to save more.
Where does this come from? I think it's too general. It doesn't take into account age when starting work (late for OP), student loans (large for OP), where you live (possibly HCOL for OP). He also has 2 maxed 401ks x 2-3 years which is another close to 100k. And if he had put 20% down on the house he'd easily be above 2 times salary.
OP I think you're doing ok with savings. Not enough to retire in 10 years though.

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