Brand new and feeling behind

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
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Topic Author
Followyourfeet
Posts: 10
Joined: Sun Sep 22, 2019 3:49 pm

Brand new and feeling behind

Post by Followyourfeet »

Hello All,

My husband and I trying to figure out our investment path.

A little about us. We are 30, have a mortgage with 270k left at 4 percent. We paid 350k and our current value is around 450k. We have saved up at least a year's worth of living expenses. We however do not have any investments at this time and would like to change that. I am currently staying home with our children and my husband is employed in a commission based position making around 90k a year. We would like to move a portion of our savings to a higher yeilding savings account or money market account and open a Roth IRA for my husband and a spousal Roth IRA for myself. Looking for some advice to get me started in the right direction. Where is the best money market account in your experience? Should we invest in Target date funds, or pick our own allocation, do something different ?
retiredjg
Posts: 42210
Joined: Thu Jan 10, 2008 12:56 pm

Re: Brand new and feeling behind

Post by retiredjg »

Welcome to the forum. :happy

Followyourfeet wrote: Sun Sep 22, 2019 4:11 pm We have saved up at least a year's worth of living expenses. We however do not have any investments at this time and would like to change that.
Good for you!

Some people want a year's worth of expenses for their "emergency fund". Whether you need that much depends on the stability of the family income.

If the family income is from a super stable job, you probably don't need to keep a year's worth and could invest some of this money.

If the family income is from a job that could disappear in times of financial crisis, it might be wise to keep all of this an an emergency fund. Bad times will come from time to time. Your savings will get you through it.

I am currently staying home with our children and my husband is employed in a commission based position making around 90k a year.
This probably puts you in the 12% tax bracket (federal).

We would like to move a portion of our savings to a higher yeilding savings account or money market account and open a Roth IRA for my husband and a spousal Roth IRA for myself.
Yes, you could each contribute to either a traditional IRA (deduct that contribution from your income) or a Roth IRA (no deduction). Which is best for you is not clear at this time.

Looking for some advice to get me started in the right direction.
The first place to look is your DH's employment. Is there any kind of retirement plan available there?

Where is the best money market account in your experience? Should we invest in Target date funds, or pick our own allocation, do something different ?
There is a place for a money market account, but investing in stocks funds and bond funds is what you need to be considering for your retirement money.
Topic Author
Followyourfeet
Posts: 10
Joined: Sun Sep 22, 2019 3:49 pm

Re: Brand new and feeling behind

Post by Followyourfeet »

Thank you for the reply!

We are comfortable moving some of our savings to investments. But would like to keep a good chunk as the emergency fund. It's currently sitting in a savings account with a 0.01 APY and we would like to move the emergency fund portion to a better place. That is why I asked about a possible money market account.

My husband's employer currently offers a 401k with little to no match. My husband's employer has been very rocky on the HR side and my husband has been considering changing jobs for awhile. We aren't concerned with my husband not having a job, he may just not have that job. my husband doesn't feel comfortable doing anything tied to his employer. that is why we were leaning to the side of a Roth IRA for now.
DonIce
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Re: Brand new and feeling behind

Post by DonIce »

Followyourfeet wrote: Sun Sep 22, 2019 4:57 pm We are comfortable moving some of our savings to investments. But would like to keep a good chunk as the emergency fund. It's currently sitting in a savings account with a 0.01 APY and we would like to move the emergency fund portion to a better place. That is why I asked about a possible money market account.
You can get savings accounts paying 2-2.5% from many banks:

https://www.depositaccounts.com/savings/
https://www.bankrate.com/banking/savings/rates/

While figuring out the right investment strategy for you may take a little while, just moving your savings to somewhere they earn a fair rate of interest is something you can get rolling today.
HomeStretch
Posts: 5131
Joined: Thu Dec 27, 2018 3:06 pm

Re: Brand new and feeling behind

Post by HomeStretch »

For your emergency fund:

You can open a high yield money market account at a local bank, credit union or an online bank like Ally.

You could open a Fidelity Cash Management account (CMA) that functions like a checking account. You hold your money in the settlement account or you can invest in another money market fund. The interest/dividend rates are good. Fidelity has local offices but they do not offer as many services as some brick and mortar banks like cash deposits or safe deposit box. The CMA wiki page is here:
https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop

You could open a Vanguard Taxable brokerage account and put the money in a money market fund like VMMXX Prime Money Market Fund or, if you are in a high tax state, a fund like VMFXX or VUSXX (if you can meet the one-time fund minimum investment of $50k) with some/all dividends exempt from state tax. Vanguard usually has the best money market fund rates but there are no local offices (everything is online).

Some of these options are FDIC insured and some are SIPC insured subject to limits.

Edited for typos.
Last edited by HomeStretch on Sun Sep 22, 2019 6:30 pm, edited 3 times in total.
retiredjg
Posts: 42210
Joined: Thu Jan 10, 2008 12:56 pm

Re: Brand new and feeling behind

Post by retiredjg »

Followyourfeet wrote: Sun Sep 22, 2019 4:57 pm We are comfortable moving some of our savings to investments. But would like to keep a good chunk as the emergency fund. It's currently sitting in a savings account with a 0.01 APY and we would like to move the emergency fund portion to a better place. That is why I asked about a possible money market account.
You can probably do better with this money. Perhaps at a high yield savings account at an online bank. I don't know much about that, but "Ally" gets mentioned a lot.

My husband's employer currently offers a 401k with little to no match. My husband's employer has been very rocky on the HR side and my husband has been considering changing jobs for awhile. We aren't concerned with my husband not having a job, he may just not have that job. my husband doesn't feel comfortable doing anything tied to his employer. that is why we were leaning to the side of a Roth IRA for now.
Roth IRA is fine. Traditional IRA may be fine as well. His 401k is likely to be fine too. Or not. Depends on things we don't know.

A 401k is not really "tied" to the employer. Could be good, could be bad. But any kind of a match is free money. I would not rule this out just because he is not happy with the employer.

Tell us what you know about the 401k.
livesoft
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Re: Brand new and feeling behind

Post by livesoft »

I suggest that you all start contributing to the 401(k). There is nothing in your posts that would tell me not to contribute the max possible.
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Topic Author
Followyourfeet
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Joined: Sun Sep 22, 2019 3:49 pm

Re: Brand new and feeling behind

Post by Followyourfeet »

Ok, I did some digging on the 401k... There is more of a match than I thought. It's $0.15 on up to 8 percent of income not to exceed $2k. It's managed by Lincoln financial unless things have changed since I got this information.
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arcticpineapplecorp.
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Re: Brand new and feeling behind

Post by arcticpineapplecorp. »

Followyourfeet wrote: Sun Sep 22, 2019 8:28 pm Ok, I did some digging on the 401k... There is more of a match than I thought. It's $0.15 on up to 8 percent of income not to exceed $2k. It's managed by Lincoln financial unless things have changed since I got this information.
can you clarify the match? I'm not sure what $0.15 is other than 15 cents. Not sure what the 15 cents the employer is providing. Is it 15 cents of every dollar up to 8% of his pay? If so and he saves 8% of his $90,000 salary, that'd be $7200 invested (8% X $90,000 salary = $7200 contribution) but only a $1080 match (because 15% of $7200 contribution is $1080 employer match). If that's the case, in order to snag the full $2000 employer match one would need to earn at least $170,000 (and contribute 8% or more of their salary). If this is what you're saying, it's still worth saving $7200 to snag the extra $1080 from the employer.

am I missing something or is that how the employer match works?

you should provide a list of the funds offered and expense ratios (and any administrative/record keeping fees, etc.) to better evaluate. Please repost according to this:

https://www.bogleheads.org/wiki/Asking_ ... _questions
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Topic Author
Followyourfeet
Posts: 10
Joined: Sun Sep 22, 2019 3:49 pm

Re: Brand new and feeling behind

Post by Followyourfeet »

Yes I was referring to 15 cents. I do believe the way you calculated it to be correct that he would need to contribute $7200. The booklet I have is from many years ago, I am going to have DH get updated information tomorrow and report back with all the information requested

In the meantime, I've been looking for a better savings account or money market account.. I've been running into issues with limits on withdraws. Some places I have found limit you to $2,000 a day or less and 6 withdraws a month I don't feel this gives me enough access to emergency money.

Thank you everyone for the help!
System1
Posts: 18
Joined: Thu Sep 12, 2019 10:08 pm

Re: Brand new and feeling behind

Post by System1 »

Followyourfeet wrote: Sun Sep 22, 2019 9:35 pm In the meantime, I've been looking for a better savings account or money market account.. I've been running into issues with limits on withdraws. Some places I have found limit you to $2,000 a day or less and 6 withdraws a month I don't feel this gives me enough access to emergency money.

Thank you everyone for the help!
The 6 withdrawal limit is a federal regulation and probably applies to the account you currently have the money in.

https://www.bankrate.com/banking/savings/regulation-d/

Just make large withdrawals if you need to, 6 per month is more than once a week, you will hopefully know your need for the next week. I use Capital One 360 money market at 2% and I'm pretty happy with it. I also use that bank as my primary checking and savings, so the transfers are all same day.
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CyclingDuo
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Re: Brand new and feeling behind

Post by CyclingDuo »

Followyourfeet wrote: Sun Sep 22, 2019 4:11 pm Hello All,

My husband and I trying to figure out our investment path.

A little about us. We are 30, have a mortgage with 270k left at 4 percent. We paid 350k and our current value is around 450k. We have saved up at least a year's worth of living expenses. We however do not have any investments at this time and would like to change that. I am currently staying home with our children and my husband is employed in a commission based position making around 90k a year. We would like to move a portion of our savings to a higher yeilding savings account or money market account and open a Roth IRA for my husband and a spousal Roth IRA for myself. Looking for some advice to get me started in the right direction. Where is the best money market account in your experience? Should we invest in Target date funds, or pick our own allocation, do something different ?
Invest in your husbands 401k to get the match, and fund IRA's for both of you as well.

What are the chances of you getting a job as well (even if part-time while the kids are young, but full time later) to increase the household income and savings rate? The timeline of using the power of time and compounding means what you can invest on an automated schedule (every paycheck) now for the long haul is going to pack some serious punch compared to waiting any longer to begin investing. The later you start, the more you have to invest out of every paycheck to make up for lost time.
"Save like a pessimist, invest like an optimist." - Morgan Housel
aerosurfer
Posts: 234
Joined: Fri Feb 02, 2018 6:10 am

Re: Brand new and feeling behind

Post by aerosurfer »

Happy Ally customer here. They have been my primary bank now for almost 10 years. The 6 withdrawls per per month is free, after that there is a charge. Its not a limit. Just open both savings and checking and transfer as needed. It's all in real time. They also have No penalty CDs that pay slightly higher than savings, I have been using those in 5k increments lately for holding cash. Accessing ALL of my money at Ally isnt something I worry about. If I needed more that fast, that's what Credit cards are for.

Vanguard money market fund is great too as mentioned
billfromct
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Joined: Tue Dec 03, 2013 9:05 am

Re: Brand new and feeling behind

Post by billfromct »

I would open a Vanguard Brokerage Account for each of you. $3,000 can open a Vanguard Federal Money Market Fund (VMFXX) which pays 2.03%.

This would be your "sweep" account where you would transfer money from your bank checking account to open the Vanguard Federal Money Market account. You would transfer money from the "sweep" money market fund to make contributions to your Roth IRA.

Transfers between your bank checking account & your Vanguard Federal Money Market Fund will take 1-2 business days depending on the time of day you do the on-line transfer.

You can also write checks off the Vanguard Federal Money Market Fund if over $250.

You may want to open your Roth IRA with at Target Retirement Fund based on the year you plan to retire or age 65 if you have no idea when you will retire. The Target Retirement Fund will start out with more stocks when you are young (80%), move to 50% stocks/50% bonds at your target retirement year then 30% stocks/70% bonds 7 years after your Target year.

You can open a Vanguard Target Retirement Fund with a $1,000 contribution.

At age 30 with 30-35 years before retirement, watching that Roth IRA compound state & Federal tax free with the ability to take money out state & Federal tax free after age 59.5 will be amazing when you do actually do retire. I wish there were Roth IRAs available when I was 30 years old.

This can all be done "on-line". Just Google "open Vanguard account".

bill
Dottie57
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Location: Earth Northern Hemisphere

Re: Brand new and feeling behind

Post by Dottie57 »

I was behind too. I started at age 30 when Employer started a 401k. I made about 30k, limit to contributions was 9 k (max) and 15% max. By contributing 15 % a year and more when I made more I have a tidy sum for retirement.
Jack FFR1846
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Re: Brand new and feeling behind

Post by Jack FFR1846 »

Redneck Bank's Megamoney account pays 2.4% currently up to $50k invested. You are, of course limited to 6 withdrawals per statement period (month) but can move $5k per transaction with a click online. I believe you can move more by calling, but never have done that myself.
Bogle: Smart Beta is stupid
Topic Author
Followyourfeet
Posts: 10
Joined: Sun Sep 22, 2019 3:49 pm

Re: Brand new and feeling behind

Post by Followyourfeet »

Great suggestions, I'll be investigating!

To answer the question about going back to work...
I hold a registered nurse license which I keep active, and do plan to use again but do not have an exact timeline as of now. Our 2 children are young and not of school age yet. With the costs of daycare and the amount of time they would be there it's been our personal choice to have me home for a few years.
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