how would you invest

[cayman12]

im 26

50K in cash
5K in 401k
10K in roth (stocks)
14k in brokerage (stocks)

income 25k/yr

i have no debt, no cc debt, no car loans, no student loans, no rent or house payments. and im single

how should i invest my money??

Thanks

[KTP]

im 26

50K in cash
5K in 401k
10K in roth (stocks)
14k in brokerage (stocks)

income 25k/yr

i have no debt, no cc debt, no car loans, no student loans, no rent or house payments. and im single

how should i invest my money??

Thanks

hmmm...I would max the roth every year you can while your income is that low. later, when you have a higher income (hopefully, if not from your job, then from your investments) you might want to *hide* some of it from the IRS by contributing more to your 401K. Right now I would say only contribute to the 401K up to the employer match, if any.

Now, as to how to invest it. 26 years old...hmmm.
Wait until after Nov elections and QE2, then see where the market is.
Split your money into piles. Have a emergency fund pile (yours can be quite little), a moderate risk pile (pretty big), and a high risk pile (pretty small).
Something like 10K of cash or cash like stuff (CD or money market)
40K of your cash in big a$$ blue chips paying hefty dividends with low pe ratios. IMO these are much better than bonds right now, and with a 4% or higher dividend, you don't really *have* to have the stock itself appreciate much in order to beat most bonds.
14K brokerage into either mid caps with good balance sheet or commodities if you like that stuff. I am not a huge fan of gold, but some on here swear by silver.
10K Roth make this your highest risk investment. Tech stocks, small caps, international. Stuff to earn you 20% a year.
5K 401K maybe the Vanguard VGHCX healthcare index fund (it might have a higher min balance though). I like the idea of healthcare for a 401K investment because when you are ready to pull out the money from it, you are probably spending it at a company you own a part of

Do you like picking individual stocks like me, or do you prefer mutual funds?

[cayman12]

all of my stuff is individual stocks. a couple of them i have DRIPping

[jIM_Ohio]

im 26

50K in cash
5K in 401k
10K in roth (stocks)
14k in brokerage (stocks)

income 25k/yr

i have no debt, no cc debt, no car loans, no student loans, no rent or house payments. and im single

how should i invest my money??

Thanks

How much PER YEAR can you invest?
Does the 401k match anything?

[cayman12]

i can invest as much as I want, since i have no bills (currently). in the near future though i would like to buy a house. so that would add some expense. Is 40K too much in cash right now. keep in mind i need money for a down payment. and i dont have a 401k right now, its from an old job. i plan on maxing my roth for sure.

[KTP]

i can invest as much as I want, since i have no bills (currently). in the near future though i would like to buy a house. so that would add some expense. Is 40K too much in cash right now. keep in mind i need money for a down payment. and i dont have a 401k right now, its from an old job. i plan on maxing my roth for sure.

Noooo! don't buy a house. You just end up filling it with crap like we did and then you start a thread in general chat like DisneySteve about how you have to work every day to donate crap in order to reduce clutter.

You are in such great financial shape right now at age 26. If you make the right moves for the next 10 years, you could retire at 40. Keep living with your parents or in a car or whatever, keep the tax man away by being clever with your investments and listening to Jim_Ohio, and then come back here in 10 years and ask us how you should organize your 1.6 million dollars to best generate a steady income.

[gambler2075]

Noooo! don't buy a house. You just end up filling it with crap like we did and then you start a thread in general chat like DisneySteve about how you have to work every day to donate crap in order to reduce clutter.

g

[gambler2075]

g

Uh oh! I just looked down and saw that DS was reading this thread... please sir, don't ban me from SA!!! I was just kidding!!!



g

[disneysteve]

DS reads virtually EVERY thread, so be careful what you say. Just kidding. I do have a sense of humor after all.

im 26

50K in cash
no rent or house payments

how should i invest my money??

I would "invest" in being a grown-up. Why does a 26-year-old with $80,000 in savings still live at home with mom and dad? Clearly, it isn't out of financial need. And you aren't even helping cover costs. Sorry, but I can't comprehend living like that at your age. Go out this week and find yourself a decent apartment that you can afford on your income. Obviously, putting down the security deposit won't be an issue. Move out ASAP and start your adult life. After you've done that, come back here and list your new monthly budget and we can then answer your question about how to invest at that point.

[littleroc02us]

Great time to invest. Have you maxed out your Roth's for the year. Do that. You can't make up the time portion if you haven't. The gov't is giving you a gift by offering no tax at the time of withdrawl. Since you have 50k saved in cash, use $5000 to do the Roth idea, then use the rest on maybe something like upping your 401k and then use the rest to save for a large downpayment on a house. Since your not paying rent right now, stash away half your income for the next 3 years and you would have around 40k + 30k or something like that for a house. Good luck. Stay away from debt.

[jIM_Ohio]

i can invest as much as I want, since i have no bills (currently). in the near future though i would like to buy a house. so that would add some expense. Is 40K too much in cash right now. keep in mind i need money for a down payment. and i dont have a 401k right now, its from an old job. i plan on maxing my roth for sure.

im 26

50K in cash
5K in 401k
10K in roth (stocks)
14k in brokerage (stocks)

income 25k/yr

i have no debt, no cc debt, no car loans, no student loans, no rent or house payments. and im single

how should i invest my money??

Thanks

Focus on 3 things

1) spend less than you earn
2) pay cash for any large expenses (like cars) if at all possible
3) have a plan for all money and only focus on returns with long term money

50k in cash is OK if you intend to buy a house. A suggestion might be to get a modest house and rent out a couple of rooms to increase income from 25k to 30k. That 5k is a "return" better than the 50k is earning now and you also get a place to live for that expense too.

I would break it down like this:

20% of gross to retirement accounts ($5000 to Roth IRA meets this goal)
**30% of gross ($7500) to savings (for house or other short-mid term large expenses -like a replacement car)
50% of gross to spending and taxes.

** that 30% of gross is also the max house payment you want to consider. $7500/year is $625/mo. This means max house payment you want is $625/mo which is about $120k financed at 5% for 30 years. The $625/mo is max payment you would want to consider- even if you add renters, that reduces the risk of the $625, but do not "get more house" because you intend to rent if you like that idea.

I would ask a few questions to get more information. You are probably not ready to get a house yet, but some of the following will change when you get house:

1) Your tax return- what is your AGI and taxable income?
2) On that same tax return, are you eligible to claim the std deduction and your own dependency?
3) If you get a house its possible those numbers change, so you need to know what you are doing (tax wise) before considering house purchase
4) Income is low (25k) but expenses are low too. A common issue is expenses rise with income (if income goes up $5k, you do NOT want expenses to go up by 5k- make sure some of every raise is saved)
5) Focus on expenses "all the time". A person has moderate control over their income, they have 100% control of their expenses. Focus on expenses and knowing how much things cost whether you live at home or on your own.

[tulog]

50K in cash

Porsche...Cayman(the first of the twelve)?

[jpg7n16]

Did anyone else try to post their reply in Gamblers post???? hahaha

Stupid screen shot!!


To the OP: you have wayyyy too much in cash! Max in cash should be 3-6 months of expenses. You have 24 months income! (and clearly your income is much higher than your expenses are)

Move out of the cash into some other investment. I'd prob move $30k of the cash into the brokerage account. And depending on when you need the money again:

Soon: short term bond fun
2-5 years: mid-term bond fund
5+ years: stocks/equity mutual funds

Then another $5k into your Roth to fund it for this year, if you haven't already.

That would leave you with $15k in cash - of which $5k is designated for your Roth contribution for next year (which you can make in like 2 months).

That would leave you with $10k in cash, which is probably still a bit high, but acceptable.

[Kris Jarczyk]

Buy a house or investment property. Homes are low priced and rates are so great! Whatever you buy, a home, stocks, etc. smart investors buy at the bottom.

[fiscallyprudent]

the answer to your question would depend on where you are in life and what your immediate and intermediate goals are. I agree with Kris above; home prices are favorable and so are interest rates. But that also depends on where you see yourself in the next 5 years (marital status, family, etc).

But I think you're doing really well. In the order of importance, i'd do the following:

1. Build and emergency fund - I'd say 15k
2. Max Roth IRA contributions
3. Invest in your 401k
4. Look into home ownership