Financially savvy people please help

amother

Crimson

Thu, Dec 07 2017, 8:46 pm

Young couple, about 40k in savings, leave it sitting in bank for eventual house down payment or invest some of it to grow money?

If you would invest how much and where?

amother

Crimson

Thu, Dec 07 2017, 9:10 pm

doctorima wrote:

Invest most of it in a balanced portfolio (stocks, bonds, etc.) of index mutual funds from Vanguard or Fidelity.

How safe is that? What do you consider most of it? 30k? When can I get my cash out?

amother

Silver

Thu, Dec 07 2017, 9:14 pm

We keep our money in mutual funds. (Fidelity) it is doing really, really, well. However it’s the stock market. While it’s low risk, it’s still somewhat risky. If you can afford to leave the money there if it drops in value, I say go ahead. On average it makes 7% interest which is quite good considering the risk factor. I don’t deal with it at all. It’s an account I opened with a company called Portfolio Strategies (Kirschenbaum). we hope to open accounts for our kids as well and contribute a little money every month.
The good thing about it is it’s very easy to take money out. We give them a call and let them know we’d like to take out X amount, and they make sure it’s available. We can then transfer it from our online account or they mail us a check. Takes about a day for the money to be available, if it’s not too much we don’t wait at all.

amother

Salmon

Thu, Dec 07 2017, 9:18 pm

amother wrote:

Not thrilled but not devastated... Where would you recommend I put 5k now?

Even a low risk mutual fund can loss money - but over a course of a few years (you are talking about a few years) you should be okay.

Personally - I'm a nervous investor - and I kept my savings that I had earmarked for a down-payment in a high interest savings account. Happens to be at the time the rates were a lot better than they are now... but I think that would still be what I would do. I'd force the money to grow, but adding to it from my paycheck. But that me.

Mommyg8

Thu, Dec 07 2017, 9:19 pm

amother wrote:

A high interest savings account? Does such a thing exist? I'm all ears.

amother

Salmon

Thu, Dec 07 2017, 9:25 pm

Mommyg8 wrote:

A high interest savings account? Does such a thing exist? I'm all ears.

Opps I used a Canadian term. The US calls them High-Yield accounts.

As I said - the interest rate now is very low - as a result the high-yield isn't particularly high...

https://www.thesimpledollar.co.....unts/

amother

Chocolate

Thu, Dec 07 2017, 10:11 pm

amother wrote:

How safe is that? What do you consider most of it? 30k? When can I get my cash out?

.

You can cash out of an index fund whenever you like. The fund mirrors the stock market as a whole. The market is doing extremely well right now, but there are no guarantees, and after a good long run like we've been having, it's almost inevitable that there will be a correction soon.

However, as a whole, the market rises. So you have to decide when you want this money and whether you can tolerate some ups and downs until then. If you need the money in a year, put it into something safe like bonds. The losses and gains are minimal. If you have five years, you can probably risk the stock market.

amother

Silver

Thu, Dec 07 2017, 11:13 pm

amother wrote:

it’s very, very low. I’d take a chance in the market, assuming I could wait a few years to take out the money in case the market goes down. You don’t want to sell at a loss.

Mommyg8

Thu, Dec 07 2017, 11:14 pm

amother wrote:

it’s very, very low. I’d take a chance in the market, assuming I could wait a few years to take out the money in case the market goes down. You don’t want to sell at a loss.

I have a feeling that the interest rate is below the rate of inflation... which means that if you leave it in the bank, you will lose money over the years.

amother

Babyblue

Fri, Dec 08 2017, 7:16 am

amother wrote:

Thre face that you're calling the stock market "low risk", must mean you weren't invested in the years 2000 and 2008 when the market had tremendous losses.

It is true that the market usually goes higher.

amother

Silver

Fri, Dec 08 2017, 7:30 am

amother wrote:

I actually was! So here’s my point: because we left the money there, and didn’t withdraw it, it picked up and climbed a lot higher since then. I keep saying you need to be able to afford to let the money sit - precisely because of what happened those years.