Best Place to Put 50K for Long-Term Savings

[Deleted]

Once I have purchased a vehicle, bought a house, and have funded my repairs to house, business ventures, and travel, I plan to have enough money left to at a minimum fully fund a ROTH for 2019 and invest 50K+ somewhere.

I'm looking for suggestions for where to put the cash? Ladder CD's, keep it in a savings account, etc...

While I don't plan on ever touching the money, I do want access to it in the case of an emergency situation such as a massive flood, fire, whatever.

[thyme4change]

I will give you my theory, but you have to know that I suspect I have a decently high risk tolerance, and have no real problems staying in a market that has been bouncing around. I've lost a lot of money, but made so very much more.

For my adult life, I have kept most of my emergency fund in mutual funds / brokerage account at Schwab. I figure that if I leave it for a couple of years, I will have earned enough in the market to swallow any loss I may take if I absolutely need the money during a harsh market downturn.

That said. I never put a large sum in all at once. If I had a large sum, I may wait until everyone is crying about how low the market is and explaining why we just had a crash. If you said you had 5 grand, and $200 extra dollars per month, I would tell you to start right away.

The market has been very, very good to me.

[haapai]

Well, you could definitely put $6K or $7K into a  2020 Roth IRA at the same time.

As for the rest, I'm in a similar boat.  Big, life-changing, never-to-be-seen again windfalls are actually pretty tricky.  An awful lot depends on your tax, income, and expense situation and there is a dearth of discussion regarding what to do with to do with big windfalls when you are over fifty, single, without dependents and making a whole lot less than the median income.

FWIW, I'm leaning heavily toward throwing what doesn't fit in an IRA into a taxable investment account. 

[Deleted]

You could start with an online savings account.  Many of those are paying in the 1.5% - 2% range.  They don't lock up your money like a CD, laddered or not, would.

True emergency money should be accessible.  Emergencies like to happen with the market is down and in conjunction with other gifts from Murphy.

But congrats on the sale going through. 

[haapai]

You can definitely fund a 2020 IRA at the same time that you fund your 2019 one,   Or you could partially fund it, leaving yourself a grand or two of play which you could later put in either a traditional or Roth IRA depending on the tax implications. 

I'm definitely leaning more heavily toward an after-tax investment account than I was 2 months ago.  As much as I dislike the waiting for paper to arrive in the mail before I can file my taxes, I definitely see how using a taxable account instead of a Roth IRA gives me all sorts of leeway. 

Since I have access to a workplace 401(k), I don't have to worry too much about having too much AGI as long as I pay some attention to my income during the year.  If I were self-employed or had income that was unpredictable, I'd be far more concerned about filling up my IRAs too quickly or putting too much into the trad or the Roth. 

[bobosensei]

I say fund a roth for 2019 and 2020.  remember you could take out the contributions if needed.  I also have a small amount in an online savings account, and the rest in vanguard index funds.  The vanguard account was always easy enough to liquidate when needed.  I can get the money in about a week.  I recall you have low expenses so max I'd only do 6-9 months expenses in online savings, the rest in vanguard or fidelity brokerage.  I haven't looked too much at those 0 cost funds fidelity has, but read that they essentially mimic the s&p 500 without having to pay for using the name.

[Deleted]

I don't know why I didn't think I could fund both 2019 and 2020 at the same time. Duh on my part there. 

My plan is to keep enough cash to work on my house, business, and enjoy my life for a while, but at the same time have enough money put back that I won't have to have any stress over a potential major house problem or two or three for a long time.

I've been living in survival mode and freak out about Murphy mode so long that I really want out from under that stress. This is one of the big reasons I'm not willing to go a ton of cash on a nicer/bigger house. Plus, my COL is going to go up when I move, so I prefer a smaller/cheaper living space to help offset that for the future.

In my new house I will have higher internet, higher phone bills, will have to pay for water/sewer, higher property taxes, etc... 

[Deleted]

Dec 29, 2019 19:15:17 GMT -5 @shastasnewlife said:

I don't know why I didn't think I could fund both 2019 and 2020 at the same time. Duh on my part there. 

My plan is to keep enough cash to work on my house, business, and enjoy my life for a while, but at the same time have enough money put back that I won't have to have any stress over a potential major house problem or two or three for a long time.

I've been living in survival mode and freak out about Murphy mode so long that I really want out from under that stress. This is one of the big reasons I'm not willing to go a ton of cash on a nicer/bigger house. Plus, my COL is going to go up when I move, so I prefer a smaller/cheaper living space to help offset that for the future.

In my new house I will have higher internet, higher phone bills, will have to pay for water/sewer, higher property taxes, etc... 

You are really thinking this through for the short and long term.  Smart!

[Tiny]

If it was me, I'd think of the 50K in two different chunks.... an immediate EF and then money I could invest long term. 

Since I was just starting out with a lot of unknowns (new house, new everything) AND since you have the $$ available... I'd probably figure out what I needed to keep the house for a year  (mortgage, proptaxes, insurance) + 3 to 6 months of the other fixed expenses.    I'd probably do a savings account/checking account with a month's fixed expenses  and the rest I'd do CDs 12 months to 18 months.    Any part of the 50K that wasn't included in this money - I'd put into a brokerage account at Vanguard/Fidelity/where ever you have your $$.    I'd review any minimum balances on a core cash account.  I'd then work on figuring out what kind of investments made sense for me.  (the boglehead 3 fund route?  A bond fund?  an S&P500 fund something else) and get the money invested.    

As the CDs come due - I'd do a "financial/life review" and make changes or not. 

[thyme4change]

How much cash should one really have on hand? Are you betting on being out of work, or is it more like you will need to cover big car repairs and some unexpected dental work? They are very different amounts, and have very different calculations to get there. Getting a new roof on your house costs 8 grand if you are poor, or a millionaire. Covering your bills for a few months depend on the amount of your bills. It isn't an easy answer.

[Deleted]

Dec 29, 2019 20:48:18 GMT -5 @donethat said:

Dec 29, 2019 19:15:17 GMT -5 @shastasnewlife said:

I don't know why I didn't think I could fund both 2019 and 2020 at the same time. Duh on my part there. 

My plan is to keep enough cash to work on my house, business, and enjoy my life for a while, but at the same time have enough money put back that I won't have to have any stress over a potential major house problem or two or three for a long time.

I've been living in survival mode and freak out about Murphy mode so long that I really want out from under that stress. This is one of the big reasons I'm not willing to go a ton of cash on a nicer/bigger house. Plus, my COL is going to go up when I move, so I prefer a smaller/cheaper living space to help offset that for the future.

In my new house I will have higher internet, higher phone bills, will have to pay for water/sewer, higher property taxes, etc... 

You are really thinking this through for the short and long term.  Smart!

At this point my house may never close so it might be a mute point.

Yes, I've been thinking about all of the potential costs and how to offset some of my tax liability since I am self-employed.

I've considered laddering some CDs or something and then making sure I could fully fund a ROTH each year for the next 5-10 years with it. 

[Deleted]

Dec 30, 2019 12:04:30 GMT -5 Tiny said:

If it was me, I'd think of the 50K in two different chunks.... an immediate EF and then money I could invest long term. 

Since I was just starting out with a lot of unknowns (new house, new everything) AND since you have the $$ available... I'd probably figure out what I needed to keep the house for a year  (mortgage, proptaxes, insurance) + 3 to 6 months of the other fixed expenses.    I'd probably do a savings account/checking account with a month's fixed expenses  and the rest I'd do CDs 12 months to 18 months.    Any part of the 50K that wasn't included in this money - I'd put into a brokerage account at Vanguard/Fidelity/where ever you have your $$.    I'd review any minimum balances on a core cash account.  I'd then work on figuring out what kind of investments made sense for me.  (the boglehead 3 fund route?  A bond fund?  an S&P500 fund something else) and get the money invested.    

As the CDs come due - I'd do a "financial/life review" and make changes or not. 

I won't have a mortgage. With a lower priced house, I will have lower taxes, insurance, and on just about anything I will have to pay for FEMA flood insurance.

After buying a vehicle and traveling to buy a house, I should have about 190K-200K in my checking account.

The money I hold back in a savings/checking account will depend largely on what house I buy.

If I buy the 50K house knowing it needs 30-40K work, I will hold that.

If I buy the $110K house that only needs a fence and whatever else I find wrong after moving in, then probably more like 15-20K.

I need 5K-10K for my business and 10K would completely support me for the next year if I chose not to work. I will work, but plan to hold about 10K anyway so I have enough cash to buy things for my house, travel, and change who I am working for without having to stress about it.

On the 50K property, I would have a minimum of 
$190K-90K-20K = 80K to go into savings.

On the 110K property, I would have a minimum of
$190K-130K-20K = 50K to go into savings

I plan to adjust my business and living cash if I find a higher priced house and decide to go that route. Until I go up there and figure out what I want to buy, that part is all speculation. However, I want at least 50K between long-term savings and ROTH. 

[Plain Old Petunia]

Dec 30, 2019 13:35:50 GMT -5 @shastasnewlife said:

Dec 30, 2019 12:04:30 GMT -5 Tiny said:

If it was me, I'd think of the 50K in two different chunks.... an immediate EF and then money I could invest long term. 

Since I was just starting out with a lot of unknowns (new house, new everything) AND since you have the $$ available... I'd probably figure out what I needed to keep the house for a year  (mortgage, proptaxes, insurance) + 3 to 6 months of the other fixed expenses.    I'd probably do a savings account/checking account with a month's fixed expenses  and the rest I'd do CDs 12 months to 18 months.    Any part of the 50K that wasn't included in this money - I'd put into a brokerage account at Vanguard/Fidelity/where ever you have your $$.    I'd review any minimum balances on a core cash account.  I'd then work on figuring out what kind of investments made sense for me.  (the boglehead 3 fund route?  A bond fund?  an S&P500 fund something else) and get the money invested.    

As the CDs come due - I'd do a "financial/life review" and make changes or not. 

I won't have a mortgage. With a lower priced house, I will have lower taxes, insurance, and on just about anything I will have to pay for FEMA flood insurance.

After buying a vehicle and traveling to buy a house, I should have about 190K-200K in my checking account.

The money I hold back in a savings/checking account will depend largely on what house I buy.

If I buy the 50K house knowing it needs 30-40K work, I will hold that.

If I buy the $110K house that only needs a fence and whatever else I find wrong after moving in, then probably more like 15-20K.

I need 5K-10K for my business and 10K would completely support me for the next year if I chose not to work. I will work, but plan to hold about 10K anyway so I have enough cash to buy things for my house, travel, and change who I am working for without having to stress about it.

On the 50K property, I would have a minimum of 
$190K-90K-20K = 80K to go into savings.

On the 110K property, I would have a minimum of
$190K-130K-20K = 50K to go into savings

I plan to adjust my business and living cash if I find a higher priced house and decide to go that route. Until I go up there and figure out what I want to buy, that part is all speculation. However, I want at least 50K between long-term savings and ROTH. 

Whereabouts are you moving, Shasta?  The desert area of CA?   Congrats on these big, exciting changes.

[Deleted]

Jan 3, 2020 15:18:05 GMT -5 Plain Old Petunia said:

Dec 30, 2019 13:35:50 GMT -5 @shastasnewlife said:

Whereabouts are you moving, Shasta?  The desert area of CA?   Congrats on these big, exciting changes.

I'm buying a house in rural Eastern Oregon.

[Bluerobin]

shastasnewlife, I always favor dividend paying Utility stocks.  Why Utilities?  Because they pay a higher dividend rate and are generally safer than other investments.  The dividends are paid quarterly and can be reinvested if you invest through a broker.  Check them out.