YAY!!!! A milestone! Suggestions on what to do with the moola

[jschmidt]

At the age of 21, I got into marriage with a few thousand debt, and my wife came in with a few thousand saved. Those cancelled themselves out, and we have been trying to live semi-frugally. A few years back, we found ourselves with a paid off house and no debt. Yay! I continued to trudge on the career path I have been on, and found myself getting very stressed, so I have been taking it easy and doing it more part time, while using my hobby to make supplemental income as well. This past week, we have reached $200,000 in our accounts! One is an interest bearing account that has 100k in it and yields about $100 or so a month in returns. We also have $15,000 in a mutual fund that we setup about 12 years ago when we first got married.

My question is this - what would YOU do with the money to make this $200k work as hard as possible to bring in more money for you? I'm open - I am wanting some ideas. I don't want my money just sitting here doing nothing, yet I do want access to it if ever anything goes wrong.

I don't like talking to anyone I know about finances, because I am proud of our achievements, but don't ever want to come across as bragging. I am very humbled and thankful that we have been able to get to this point.

As a little side note for folks working on the path to being free from debt, and having savings ... IT IS WORTH IT! I used to be so incredibly stressed out day in and day out on finances. While I know that things can change in the blink of an eye, I can honestly say that this year is the first time I have EVER not stressed out about finances and life. It is supremely freeing to give up the rat race in keeping up with the Joneses, finding contentment and quietly knocking out the debt demons.

[catherine]

I'm not going to offer you advice, but I sure am not the one to give it, but I just wanted to share in your joy at being financially solvent, with no debt! I'm working at mind (via Dave Ramsey) and I think I have MOST of my speed bumps behind me and get that snowball rolling.

Good for you!! So true:


It is supremely freeing to give up the rat race in keeping up with the Joneses, finding contentment and quietly knocking out the debt demons.

[larknm]

jschmidt--the only advice I have is to spend it/invest it only in things you believe in. Like nothing that involves degrading the earth, the workers on the earth, or the climate. For me THAT'S WORTH IT.

[Tussiemussies]

Congratulations on your success! Sounds like such a great place to be. Don't have any advice though...

[SteveinMN]

My question is this - what would YOU do with the money to make this $200k work as hard as possible to bring in more money for you? I'm open - I am wanting some ideas. I don't want my money just sitting here doing nothing, yet I do want access to it if ever anything goes wrong.
Really, that's not a question for which there is a ready answer. Pretty much any return worth anything involves risk. It just does. No way around it, though every now and then there is an instrument out there that offers a good return without a ton of stomach-roiling risk.

So the first question you need to ask yourself is how much of that money you can put to work for you. You should have money designated as an emergency fund. Some people like to set aside three month's worth of spending for necessities. Some think three is the lower limit and you should go for six months or more. It depends on the economy in your area, how marketable your skill set(s) are in finding another job, and how much your spending or income fluctuates -- how long might you have to fund yourself completely?

Once you have an EF in a readily-accessible guaranteed vehicle, you can use the rest to invest. And you do want to invest. Follow lark's model if you wish. Or stick to businesses you understand and like. But do invest. In equities. The people who are too scared to do that will find their money isn't safe anyway because inflation will eat away at it while they're not looking.

That doesn't mean you have to go for junk bonds or penny stocks, though. Find the level of risk that lets you sleep at night, but understand that the lower the risk, the lower the likely payback. You don't say how old you are; you can stand more risk at a younger age because you have more time to make it up if the very worst happens. Cover your bets a little: invest in mutual funds rather than individual stocks and bonds. Pair some aggressive investments with some income-generating plodders. Dollar-cost average. Try to keep investment costs down, as they, too, will eat away at your return.

Strongly consider setting some goals for yourselves on how you plan to use the money you're saving. Travel? The "last" house and property? Early retirement? That will help you keep on track when it's tempting to spend the money on something else. It also will help you identify investment opportunities. Maybe it's time to start looking for the property for that last house, and having it becomes part of your portfolio.

And consider hiring a pro. Pay someone for their investment knowledge the same way you'd pay a cardiologist or an auto mechanic. The more you learn about investment, the better off you are, but everyone's aptitude and interest in it is different and there's no shame in having someone help you choose investments any more than there is shame in having someone set your dislocated knee.

[EDIT] Oh -- and congratulations!

[Gardenarian]

Congratulations!
I came into some money from an inheritance and bought a cabin. It was a good time to buy, and it was also something I loved. The value has increased incredibly, tempting me to sell - but I do love to go there on weekends and hike, escape from the crowds. I'm currently experimenting with renting it out as a vacation rental to bring in extra income - I posted it on AirBnB last week and already have three bookings. But, that may end up being more hassle than it's worth; we'll see. I think looking at investment property is something you should think about. I'm in California and we're already out of the real estate crash (and into a new bubble, I think) but it could be a good time to purchase elsewhere.

Do you read Mr. Money Mustache (http://www.mrmoneymustache.com/)? Lots of good ideas there.

[Joyous_5]

I don't have any suggestions for you but wanted to say CONGRATULATIONS!!!! That's awesome and your story is very inspiring. We're working on the Dave Ramsey plan and looking forward to that day when we can be in your position. :)

[sweetana3]

We did not have to much difficulty since a big chunk was in 401Ks. However, early in our marriage we started what we humorously called the "motor home" account to balance our funds in both tax deferred and taxable accounts. We started investing in individual stocks ala Peter Lynch and did well but over time found that the low cost index funds did just as well with a lot less attention. After all isn't it said that 80% of market timers and managers do not exceed the S&P? Doing it now, my individual money would probably be in Fidelity or Vanguard with a balanced portfolio of small, large, international, etc. funds. We follow the adage, do not put all your eggs in one basket.

As we got older and the market was crazy, we balanced our portfolio more toward cash, in our case 50/50. Our cash is in credit union CDs.

If I was starting out, first I would establish my short and long term goals including retirement. This includes a clear view of job prospects, safety and security. Once that is done, your goals often determine what you are going to do with the money.

We spent 35+ years adding to the pot while still enjoying our life. We are now retired and the pot is available.

[sweetana3]

I should have read all of Steve's note since I think we said the same thing (Steve did it even better).