Best place to put this $75K?

[dk16]

Hi all, I just got ~$75K, after tax, from a stock cashing out due to the company I work for got bought out from a cash deal. I'm not sure where to put this $ or where invest it. Any idea and thought? Here's where we're at:

- We have no debt other than our mortgage @ 3.25% interest rate.
- Both my wife and I have been maxing out our 401K contributions.
- We each had Roth IRA account, but stopped contributing to those in the last 3 years due to income limit ineligibility.
- ER funds worth ~ 8 months of expenses.

Where would be a good place to put or invest this $75K?

Thanks.

[bigdaddybus]

Whatever Ivanka puts her name on seems to be a good investment right now!

On a more serious note, I prefer high yielding growth stocks for long term growth and yield. For example Verizon currently pays a 4.98% dividend and has grown from $40-$46 over the past 5 years. (peaked around $56) a yr ago.

[kork13]

It seems generally that you're doing well for yourself, so anything we give to you will be merely improving upon what you've already got going for yourself. A few options though:

- My primary recommendation would just be to add the money to taxable investments. Stick with 1 or 2 low-cost, broad-market, index stock mutual funds that can integrate easily into your total asset allocation, such as VTSAX and/or VTIAX (total stock market US & International stock funds). That way it'll stay relatively tax-efficient and not throw off too much in the way of taxable gains. As an added bonus, this money is readily accessible whenever you need it. Sure, the value will go up and down with the market, but as long as you don't need it immediately, it can serve as savings for longer-term goals such as funding childrens' educations, buying into a business or rental properties, or just building up readily-accessible funds for retirement/early retirement.

- If you would like to increase your retirement savings, one option could be to contribute to a non-deductible IRA, then convert it to a Roth account...The so-called "Backdoor Roth" method.

- I wouldn't prioritize your mortgage right now, unless having it bothers you... It's a relatively low rate (especially after taxes), so you can earn better for yourself with investments. Likewise, it looks like you have sufficient cash reserves, so keeping the money in cash would likely be needless.

[Jluke]

Be sure that you save some of the dollars if this will increase your tax bill.

How old are you and your wife?

That plays a part here in this decision.

You may find this helpful.

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

[rennigade]

How much mortgage do you have left? Pay off a house?

YOu make too much for roth...you max 401k...8 months ER. I guess you could start up a 3 fund portfolio...vanguard or something.

[dk16]

Appreciate your replies and some good advices. Some other info

-I actually got the hold of the $ since late last year in the Ally savings. But I didn't want to make the move until paying the tax and see if there is any change or risk in my job. Now tax was done and the dust has been settled and stable at the work place. So those concerns are behind.

-We are in our early 40s and have about 4.25 x our current salary saved in retirement accounts.

-We moved into the current house less than 2 year. Still ~250K left. :-(.

Putting this $ in taxable investment doesn't look to be a bad at all. ?

More thought, recommendation?

Thanks

[Jluke]

Are you paying PMI on the mortgage? If not, then you would probably want to invest the $75k.

Any home upgrades that need to be done soon?

If you invest,

Since it would be a taxable account, you want tax efficient funds:

Simple index funds like a Total Stock Market (ETFs like ITOT, VTI or their mutual fund equivalent if that is your preference FSTVX, VTSAX).

International fund if you are interested in that... FSIVX, VXUS or equivalent mutual fund or ETF.

there are also some tax efficient bond funds like muni's, but I'm not going to pretend that I fully understand them.

I like Berkshire Hathaway B shares in my taxable (BRKB) as it does not pay dividends (tax efficient).


check me on those ticker symbols.

What are you current investments and what have you thought about doing with the cash?

[dk16]

Jluke. Thanks.

No PMI. No Thanks.

May be $10K in the landscape next year. But that will come out of excess ER funds next year as we're still funding into the ER account.

My wife wants another vehicle but couldn't convince me. We had some minor troubles with our van recently. All was cover under warranty and still covered for another 2 years.

Most of our current investments are in target funds. I really want to put this $75K back into investing. I'm unsure where and what to invest into. That's why I'm asking for ideas. All great suggestions so far.

[Jluke]

see this link as well for investing suggestions.

You may like the 3-fund portfolio approach.

[TexasHusker]

I would buy a gently used Ferrari 360 Modena and drive it on nice weekends. In 10 years it will be worth $150K.

[Singuy]

I would buy a gently used Ferrari 360 Modena and drive it on nice weekends. In 10 years it will be worth $150K.

10 years!

Yeah after spending 50k in maintenance cost..what a terrible return.

[PeggyHefferon]

10 years!

Yeah after spending 50k in maintenance cost..what a terrible return.

I am not much of a car person but that sounds like a HUGE exaggeration of maintenance costs for a car driven on weekends.

[PeggyHefferon]

Most of our current investments are in target funds.

What year for the target?

What you really need to do is decide what you want your asset allocation to be. Target funds are a great way to handle that situation for you, but you need to be careful when you invest outside of those funds.

Say your target fund has a 80/20 stock to bond allocation. If you start investing in a separate stock fund, your allocation of stocks is going to be higher than what you desired.

If you like the allocation of your target funds and want to stick with that allocation, put 80% into a stock index fund and 20% into bonds (using the example above).

[Singuy]

I am not much of a car person but that sounds like a HUGE exaggeration of maintenance costs for a car driven on weekends.

You are talking about 10 years with a Ferrari. Maintenance cost is about 3.5k/year and that's if nothing breaks. I mean tires alone are like 4k/set..and that's about 12k in tires in 10 years time.

[PeggyHefferon]

You are talking about 10 years with a Ferrari. Maintenance cost is about 3.5k/year and that's if nothing breaks. I mean tires alone are like 4k/set..and that's about 12k in tires in 10 years time.

Yeah, your numbers still seem a bit high.

It is time to get some facts straight about Ferrari maintenance costs. The myths about $1000 oil changes and $20,000 clutch replacements seem to plague the internet and car forums.

http://ferraridiy.com/the-truth-about-ferrari-maintenance-costs/