mutual fund

[Nutria]

Thank you Steve married 4 kids disabled. I have an IRA with MetLife, a Roth IRA since my income is no longer earned seems I don't qualify for either of those. I have $75,000.00 just sitting in the bank doing nothing.

Go with Vanguard (where my money is), or Fidelity (where my father invests).

Since you don't know much about investing, "dollar cost average" (Google the phrase) the money into a "passively managed" blended (combination of stocks and bonds) fund that is targeted towards your goals for that money. (That's pretty safe, conservative advice. You won't get rich quick, nor lose your shirt.)

Now the hard questions: what are your goals?

• Retirement in 20 years?
• Security in case of big medical expenses?
• Care for your children when you get too old?
• Security in case your husband loses his job?
• Something completely different?
• Some combination of the above?

Those all have different time scales, and different allowable risk tolerance. Thus, the funds you invest in will be different.

The bank calls me every month and I now I have someone from Edward Jones knocking on my door.

Heh.

[mommycakes66]

Okay so what I am understanding is to go ahead and transfer the IRA to Vanguard as a priority, Then maybe after that I can look at investiing some of the cash I have in mutual funds, I would just start with the minimum honestly watch that for 3 to 6 months and then based on how I'm feeling about that add to. Or do one moderate risk mutual fund and a chunk in a tax free bond.

I have no idea what my future will be and is why the money has just sat there in the bank. The problem is if I just let myself be held back by fear and lack of direction then I may never invest and miss out on opportunity. I feel that just adding a bit and still maintaining cash in the bank is a good start for me and then as time goes on I can decide what I want to do next.

My husband advised me not to open a 401K. He said we will move blah blah and it won't be worth it. I held off for a while but then against his advice started I think with $50 a pay and now I have that little lump sum. If I would have listened to him I probably would not have that right now. So when I look at that as an example of what can happen if you go ahead and take a chance and invest a small amount of money it makes me want to go ahead and take action even though I have no clear plan for my future.

[JustBill]

Normally if your spouse earns an income you can contribute to a spousal IRA/Roth IRA. You may wish to ask Vanguard if that applies considering you are drawing SSI. Some of the cash could also be used to fund an IRA for your spouse since you say he isn't "investing". If you don't have one, get a big mean dog to run off the EJ representative the next time they show up.

[Nutria]

Okay so what I am understanding is to go ahead and transfer the IRA to Vanguard as a priority,

And the $75,000.

Then maybe after that I can look at investiing some of the cash I have in mutual funds, I would just start with the minimum honestly watch that for 3 to 6 months and then based on how I'm feeling about that add to. Or do one moderate risk mutual fund and a chunk in a tax free bond.

No... but I understand why you think that way.

Note that you haven't told us what your goals are. Thus, giving you relatively specific advice is difficult. I'll try and give you conservative advice.

You'll start with all $75,000 in a "cash" account. Vanguard calls it a "Money Market Fund".

Since you want security, keep a minimum of 15% ($11,000) in the Money Market Fund at all times. That will leave you with $64,000 to invest.
Then, over 10 months, in 10 equal installments, invest $6,400 in the "LifeStrategy Income Fund".

That is "dollar cost averaging", and is about as conservative an investment as you can get without leaving it all in the bank.

Do something similar with your IRA.

I have no idea what my future will be and is why the money has just sat there in the bank. The problem is if I just let myself be held back by fear and lack of direction then I may never invest and miss out on opportunity.

You aren't alone.

I feel that just adding a bit and still maintaining cash in the bank is a good start for me and then as time goes on I can decide what I want to do next.

My husband advised me not to open a 401K.

Was this before you became disabled?

He said we will move blah blah and it won't be worth it.

Hmmm.

I don't know if you misunderstood him, or he has some esoteric rationale specific to your circumstances, or he's just mistaken, but that makes zero sense.

[disneysteve]

Since you want security, keep a minimum of 15% ($11,000) in the Money Market Fund at all times.

I would disagree with this one point.

For your emergency/security cash, you are actually better off with a high yielding savings account like Ally bank. Vanguard's best money market fund is paying 0.16% interest. Ally is paying 0.99%, more than 6 times higher interest.

Invest with Vanguard. Save with Ally.

[Nutria]

I would disagree with this one point.

For your emergency/security cash, you are actually better off with a high yielding savings account like Ally bank. Vanguard's best money market fund is paying 0.16% interest. Ally is paying 0.99%, more than 6 times higher interest.

Invest with Vanguard. Save with Ally.

And Discover Bank is offering 2% on CDs.

But sometimes (she's an inexperienced investor) the convenience of having it all in the same place overcomes that extra 1%.

Just MHO...

[mommycakes66]

That would have been over 10 years ago he told me not to open the 401K I was working then totally healthy had no idea that I would physically collapse. I ended up with two viruses that wiped me out. So our money was always separate he never saved would have spent all his money and my money if I would have let him. I had my own accounts and decided to invest.
The only investing he ever did was with penny stocks. I had $10,000.00 in the bank at the time and he demanded I give him money to invest in these I refused so he took out a loan and his dad chipped in and he lost it all. The friends doing this would buy and sell buy and sell. He just left it in did not move the money and the value went down to nothing.
It was about at that same time I had $10,000.00 in CD's and then opened the 401k. I spent the $10,000.00 in those first years I was unable to work and without benefits but was able to leave the 401k untouched,

[disneysteve]

So the $75,000.00 plus the $46,000 IRA and Roth just $3,000.00 is all I have personally.

Can you clarify this? You mentioned also having a 401k. How much is in that and how is it invested?

[mommycakes66]

Yes the 401k was through my employer via Metlife. After I was no longer working the Metlife reps came to my home and talked me into rolling that over into an IRA I requested that it all go into a savings account type fund that would earn a modest interest. That is what I was comfortable with at the time. They decided their way was better and basically strongly encouraged me to agree with them. So the then 401k is now my IRA worth just under $46,000.00. I wasn't contributing to that very long or very much because my work hours varied between part time and full time for years because I was having kids. Prior to that all my money went just to living and the purchase of a home and also fixing that home up.

[disneysteve]

Yes the 401k was through my employer via Metlife. After I was no longer working the Metlife reps came to my home and talked me into rolling that over into an IRA

Gotcha. I thought that might be the answer. So the IRA is the former 401k money. That makes sense.

[disneysteve]

I requested that it all go into a savings account type fund that would earn a modest interest. That is what I was comfortable with at the time. They decided their way was better and basically strongly encouraged me to agree with them.

A lesson for all: Never let anyone else pressure you into investing in something you are either not comfortable with or don't understand or both.

[mommycakes66]

The money would have done as well in a savings I think. Or just left alone it was at least 50 % S&P 500 basically it was some sort of Black Rock Large Cap Fund then a T Rowe Price mid cap and the other was an emerging business type fund and then bonds. I would have made way more in earningst to leave it right where it was.

But I can't complain my investment on that was about $20,000.00 or so that was matched by my employer and then the rest would be interest so I doubled my money. It could have increased probably closer to $50,000.00 left alone I'm thinking.

[mommycakes66]

So I have to ask security wise is money safe at Vanguard in a money market fund? I thought I read that they are not FDIC insured. If they go under then what, Not that I think they are any where near that but how safe is money there compred to a number on a computer at my local Chase bank?

[disneysteve]

So I have to ask security wise is money safe at Vanguard in a money market fund? I thought I read that they are not FDIC insured.

You are correct. They are not FDIC-insured. That said, however, if Vanguard goes under, I think the country will be in such bad shape that it won't really matter.

[Like2Plan]

I'd like to back up to this:

I have an IRA with MetLife, a Roth IRA since my income is no longer earned seems I don't qualify for either of those.

. My husband pays our mortgage and car payments. It seems like a wonderful opportunity for me to invest. Since he cannot save and would spend having him pay everything leaves little left over to waste.

Does your DH have earned income? If so, you should be able to contribute to an IRA based on his income. There are a couple of earning tests:
Link to IRS site on Spousal IRAs