Personal Finance Advice and Education! (3 Viewers)

[Chadstroma]

Honestly, this is better done through Congress. The power of the purse and all. 

I don't disagree, I just find it funny he thinks his authority to do so is limited to $10K. What is limiting him is all about political calculation... $10K is "I did it! Left be happy with me.... middle don't get mad" $50K may get too many if those in the center upset 

 

[ConstruxBoy]

I don't disagree, I just find it funny he thinks his authority to do so is limited to $10K. What is limiting him is all about political calculation... $10K is "I did it! Left be happy with me.... middle don't get mad" $50K may get too many if those in the center upset 

As it probably should.

 

[Gawain]

Just make them forgivable in bankruptcy again. The issue with this is a lot of money goes away. Makes it tougher for lower income folks to go to college. However, price of most colleges goes down as the available cash shrinks.

 

[Chadstroma]

As it probably should.

Well, yea, it is a bone to the left. He just doesn't want to get his meat picked at it too much for it by those not on the left. Hence, his odd position. Anyways.... in the end, the point is, there is very likely to be some debt forgiveness on student loans in the not too distant future so any major decisions on them or based on them should be punted for now until that gets all hammered out. 

 

[Chadstroma]

Just make them forgivable in bankruptcy again. The issue with this is a lot of money goes away. Makes it tougher for lower income folks to go to college. However, price of most colleges goes down as the available cash shrinks.

The interest rates should actually be lower considering the risk of lending them is so low since it is so hard to not pay them. That would help significantly right there. There are tons of ways to address the issues versus outright forgiveness but that would take actual adults that aren't concerned about personal power to be in DC. So.... we have what we have. 

 

[jamny]

Any advice on a new ETF to put some money in in our HSA?

Currently have:

VEU - Vanguard FTSE All World ex US

SPMD - SPDR Portfolio S&P 400 Mid Cap

SPTM - S&P 1500 Composite Stock Market

XT - iShares Exponential Technologies

I'm thinking something for the recovery like Consumer Discretionary or maybe specifically Travel and Leisure? Not sure how aggressive I want to be so maybe something that I'm missing from my list that is somewhat conservative? Not really sure which direction to go.

 

[jm192]

I've got my HSA split 80% VTI (total US Market) and 20% VB (small cap index).  

VTI is the ETF version of VTSAX and long term should be a home run. If you're on Vanguard, then you can just buy VTSAX.  But if you're on other platforms, they charge a 25$ commission and VTI as an ETF is free.

I like the small cap potential with COVID potentially going away, things opening back up, the economy booning, etc.  

 

[jamny]

I've got my HSA split 80% VTI (total US Market) and 20% VB (small cap index).  

VTI is the ETF version of VTSAX and long term should be a home run. If you're on Vanguard, then you can just buy VTSAX.  But if you're on other platforms, they charge a 25$ commission and VTI as an ETF is free.

I like the small cap potential with COVID potentially going away, things opening back up, the economy booning, etc.  

Thanks but VTI is very similar to SPTM. I think over 90%+ of SPTM is in VTI. VTI is much larger, I think twice as many holdings, but not sure if I should go with something that overlaps so much.

 

[jm192]

Thanks but VTI is very similar to SPTM. I think over 90%+ of SPTM is in VTI. VTI is much larger, I think twice as many holdings, but not sure if I should go with something that overlaps so much.

I would go with more SPTM then, and add in some small cap.  

In general, if you've got money that needs investing, more Total market Index or Large cap index is always a right answer.  You'll never not make money over the long haul.  

 

[jamny]

I would go with more SPTM then, and add in some small cap.  

In general, if you've got money that needs investing, more Total market Index or Large cap index is always a right answer.  You'll never not make money over the long haul.  

Thanks! I was just coming back to say you're overall point was accurate. Instead of trying to diversify this, I should either add to SPTM or consolidate to VTI with the new funds. I think the only reason i went with one over the other originally was because of a fee.

 

[-OZ-]

I've got my HSA split 80% VTI (total US Market) and 20% VB (small cap index).  

VTI is the ETF version of VTSAX and long term should be a home run. If you're on Vanguard, then you can just buy VTSAX.  But if you're on other platforms, they charge a 25$ commission and VTI as an ETF is free.

I like the small cap potential with COVID potentially going away, things opening back up, the economy booning, etc.  

I don't have an HSA but this seems right to me unless you expect to use the funds every year or soon. 

My house fund is probably a decent comp, if you don't mind being a bit aggressive. https://m1.finance/uy9QQEL5esea

 

[D_House]

Any advice on a new ETF to put some money in in our HSA?

Currently have:

VEU - Vanguard FTSE All World ex US

SPMD - SPDR Portfolio S&P 400 Mid Cap

SPTM - S&P 1500 Composite Stock Market

XT - iShares Exponential Technologies

I'm thinking something for the recovery like Consumer Discretionary or maybe specifically Travel and Leisure? Not sure how aggressive I want to be so maybe something that I'm missing from my list that is somewhat conservative? Not really sure which direction to go.

What HSA custodians do you all use?

We switched our HDHPs from my employer's to my wife's this year as the monthly insurance premiums were lower AND her employer makes a $1k contribution to her HSA every year. Win-win. Her plan uses HSA Bank.

We had our old HSA at Payflex. Without an active plan, Payflex charges a couple monthly fees (a 0.2% AUM fee on top of a monthly $5 "maintenance fee"). I can't roll my old HSA into hers because despite making "family" level contributions, the accounts themselves are individual.

Those old HSA funds are now mid-transfer to Fidelity (where there are no fees whatsoever). They were 100% in VSMAX (Vanguard small cap index) but Payflex made us sell out for the transfer. So the funds are out of the market until they settle at Fidelity. On the plus side, it looks like there is a much wider selection of investment options at Fidelity.

 

[jm192]

What HSA custodians do you all use?

We switched our HDHPs from my employer's to my wife's this year as the monthly insurance premiums were lower AND her employer makes a $1k contribution to her HSA every year. Win-win. Her plan uses HSA Bank.

We had our old HSA at Payflex. Without an active plan, Payflex charges a couple monthly fees (a 0.2% AUM fee on top of a monthly $5 "maintenance fee"). I can't roll my old HSA into hers because despite making "family" level contributions, the accounts themselves are individual.

Those old HSA funds are now mid-transfer to Fidelity (where there are no fees whatsoever). They were 100% in VSMAX (Vanguard small cap index) but Payflex made us sell out for the transfer. So the funds are out of the market until they settle at Fidelity. On the plus side, it looks like there is a much wider selection of investment options at Fidelity.

This is my 3rd year of having it.  The first year was on Optum.  I never invested the money.  

They changed last yeaer to HSA Bank as well.  But my account with HSA Bank gives you the option to invest through Ameritrade or something else I've never heard of.  Ameritrade is "ok."  I like Fidelity a lot better.  

 

[jamny]

This is my 3rd year of having it.  The first year was on Optum.  I never invested the money.  

They changed last yeaer to HSA Bank as well.  But my account with HSA Bank gives you the option to invest through Ameritrade or something else I've never heard of.  Ameritrade is "ok."  I like Fidelity a lot better.  

We have HSA Bank as well and trade through TD. I don't know what that other option is either and never really looked into it

 

[NajehHejan]

My company does not allow me to open an HSA account but I see a lot of you guys talking about it. If any of you guys have an account where you have some flexibility, I would highly recommend investing in either of the following:

GCV,. Todem recommended this in the Stock Thread. It’s a Convertible and income security fund that pays around a 7-8% annual dividend, paid quarterly. Set that ##### on dividend reinvestment and roll. It also has the chance for NAV appreciation, but of course, interest rates could send it the wrong way. I’m loving it because I bought it in April 2020 after the Covid crash, and it’s up a crap ton, but you have to assume it will on average just gain or lose a few percent a year, so just banking on the dividend is your best bet.

Another recommendation (mine, not todem’s, so probably not as good) is JEPI. They not only invest in buying and holding large cap stocks, but they also buy and sell options in those same companies, with their end game being able to deliver 10% MONTHLY dividend. This stock can of course go up or down with the market, so who knows whether you’re capital investment will gain or lose value, but the fact that the manager is looking to give you 10% annual returns, that seems pretty good. 

 

[D_House]

My company does not allow me to open an HSA account but I see a lot of you guys talking about it. If any of you guys have an account where you have some flexibility, I would highly recommend investing in either of the following:

GCV,. Todem recommended this in the Stock Thread. It’s a Convertible and income security fund that pays around a 7-8% annual dividend, paid quarterly. Set that ##### on dividend reinvestment and roll. It also has the chance for NAV appreciation, but of course, interest rates could send it the wrong way. I’m loving it because I bought it in April 2020 after the Covid crash, and it’s up a crap ton, but you have to assume it will on average just gain or lose a few percent a year, so just banking on the dividend is your best bet.

Another recommendation (mine, not todem’s, so probably not as good) is JEPI. They not only invest in buying and holding large cap stocks, but they also buy and sell options in those same companies, with their end game being able to deliver 10% MONTHLY dividend. This stock can of course go up or down with the market, so who knows whether you’re capital investment will gain or lose value, but the fact that the manager is looking to give you 10% annual returns, that seems pretty good. 

If you have a qualifying high deductible health plan you can open up an HSA independent of your employer/insurer. You can still take the deduction on your income taxes but because the funds don’t come from your paycheck you don’t get to dodge payroll taxes.

As mentioned above, I just opened one with Fidelity. I picked them because they don’t have any fees.

 

[Sand]

What HSA custodians do you all use?

HealthEquity.  Have to keep 1k in cash and can invest the rest.  I recall the fees to be pretty low.  No real complaints, though I don't have much choice in where I have it.

 

[Sand]

I started penciling in my tax numbers in TurboTax. Looks like I made significantly more income in 2020 than 2019.

So if I wait until April to file, I'll get a larger Covid stimulus check when the next batch goes out. The IRS is basing the stimulus amount on 2019 income, unless you've already filed 2020, then they'll use that. 

So if you made less in 2020 than in 2019, you might want to file before the stimulus so you get an amount based on the lower income. If a form shows up later, either amend or wait for the IRS to send a letter. Sometimes I've missed forms and six months later the IRS has added it in for me and sent me a letter asking for $5-10 extra. If amounts are small enough it's not worth the effort to amend. 

I'm the opposite, at least on paper.  Big rental losses (thanks Sally) and lots of tax loss harvesting hopefully drops my AGI.  We'll see when Fidelity releases my forms.  

 

[Andrew74]

HealthEquity.  Have to keep 1k in cash and can invest the rest.  I recall the fees to be pretty low.  No real complaints, though I don't have much choice in where I have it.

I have health equity as well. Low fees, Vanguard funds...about as good as it gets.  
 

My only complaint is the $1,000 minimum in cash.  Of course that’s probably why the fees are low.  I do wish I could keep a small amount in cash just for fees. 

 

[jamny]

Just to confirm...you don't pay any capital gains if you sell a stock from within an HSA, right?

 

[D_House]

Just to confirm...you don't pay any capital gains if you sell a stock from within an HSA, right?

Correct.

 

[D_House]

This is my 3rd year of having it.  The first year was on Optum.  I never invested the money.  

They changed last yeaer to HSA Bank as well.  But my account with HSA Bank gives you the option to invest through Ameritrade or something else I've never heard of. Ameritrade is "ok."  I like Fidelity a lot better.  

We went with the ‘something else’ (Devenir) for two reasons: it’s integrated through HSA bank so no additional log in and password; and we can auto-invest into mutual funds at a pre-set allocation. 

They have Vanguard index funds among the options. 

Downside is the 0.3 % AUM for up to $50k invested. So max $150/yr for the convenience of automation. Worth it to me.

 

[jamny]

Spent the past couple of days doing ETF research, especially learning about ARK...thanks @-OZ-! I was familiar with it over the past year but never really took a deep look into it. 

I've decided to sell my SPTM and go with VTI. It just beats SPTM in all previous periods so I'll assume that will continue. I'll bump my other 3 holding up a bit too.

XT is somewhat like a more conservative ARKK, especially with the equal weighting across holdings and leaning more towards larger companies. But I'll still go with 10% into ARKK to see if it can maintain its pace. Also going to go with about 5% of ARKG. It seems to have the least crossover and it's definitely a field that can blowup. Plus, it's just a fun thing to be involved with. Gonna keep my eye on the 3D printing ARK and might get into that at some point.

Thanks for steering me in the right direction, @jm192

 

[GoBirds]

I searched but didn't see an estate planning thread, I'm due to update my Will and plan to keep the format of a Will that upon death creates a Testamentary Trust for my 2 children upon death. Thought I would drop a line in here and see if anyone has done simialr planning recently that also has a large portion/majority of their net worth in real estae/small business?

 

[Chadstroma]

I searched but didn't see an estate planning thread, I'm due to update my Will and plan to keep the format of a Will that upon death creates a Testamentary Trust for my 2 children upon death. Thought I would drop a line in here and see if anyone has done simialr planning recently that also has a large portion/majority of their net worth in real estae/small business?

I am not a lawyer and don't play one on tv either...

What I did was go see a lawyer that has estate planning as one of her areas of expertise and said here is us, what do we need to do? 

We came out with the works... wife and I each have a POA, medical POA, will, living wills and trusts. Basically now we are set for anything that happens to one or the other or both. We did a quit claim deed to put the property into the trust. No small business but I am sure that all can be handled as you want in the trust. The key is having a good lawyer that does this as a matter of actual practice and not because they can and are bored or don't have enough work chasing an ambulance. (sorry... my distaste for lawyers may have bled through there... even though I have a couple of people who are very close to me and happen to be lawyers.... I am a very forgiving person)

 

[GoBirds]

I am not a lawyer and don't play one on tv either...

What I did was go see a lawyer that has estate planning as one of her areas of expertise and said here is us, what do we need to do? 

We came out with the works... wife and I each have a POA, medical POA, will, living wills and trusts. Basically now we are set for anything that happens to one or the other or both. We did a quit claim deed to put the property into the trust. No small business but I am sure that all can be handled as you want in the trust. The key is having a good lawyer that does this as a matter of actual practice and not because they can and are bored or don't have enough work chasing an ambulance. (sorry... my distaste for lawyers may have bled through there... even though I have a couple of people who are very close to me and happen to be lawyers.... I am a very forgiving person)

Thanks Chad, how old are your kids if you don’t mind me asking? Trying to get a feel for when I need to go from Will to full on Trust. My kids are 10 and 8 so still trying to figure out how big of degenerates they will become. 

 

[Chadstroma]

Thanks Chad, how old are your kids if you don’t mind me asking? Trying to get a feel for when I need to go from Will to full on Trust. My kids are 10 and 8 so still trying to figure out how big of degenerates they will become. 

Mine are 9, 7 and 5 now. When we did all this we only had my oldest with the second one baking in the oven. You can control a whole lot into the trust to protect against degeneratism. Say you want to make sure they get a college degree, then you can write it up so they get nadda until they do, etc. My lawyer basically said that a will isn't as important as a trust these days, not to mention the tax implications of not having one (I am also not a tax advisor and do not play one on tv but they are generally much more decent people than lawyers though usually boring as all get out)

 

[Judge Smails]

Bonus time.  Trying to figure out how much to keep in cash vs other investments.

I'm 58.  Goal is to work until 62 and then see.  Have a FO financial planner who I will also bounce this off of, but I think I know what he'll say so want to compare notes.

I've been maxing 401Ks for a long time, including catch up.  I also get RSUs that vest each year that are in effect cash and I don't touch that.  So both are growing nicely (though it would be phenomenal if the stock itself was growing).   What I've done with the bonuses the last 5 years is fund backdoor Roths for me and the Mrs to the max with our Planner and then after having an emergency fund we paid off the 2nd on our house.  (tore the house down to the studs years ago and had a second remaining for over $200K).  Chunked $50K, $50K and then $100K to pay that off in 3 years.  Zero debt other than 6 years left on a 15 year 2.75% note with a very manageable $2400 payment that's almost all principal now.  College done for 3 kids, 2nd wedding out of 3 this year and we've already covered a sizeable chunk after that.  Nice that expenses are falling off the ledger.

We typically live off of salary and then sock away the bonuses.  So idea was to make a 5-6 year run of getting cash in the bank.  Not laddering CD's but similar mentality with Ally.  Just peace of mind having cash if we need it whether it's an unexpected expense or an investment opportunity that comes up.  We will need cars at some point but drive so infrequently that we are willing to put that off as long as possible.  But I'm wondering if our thinking is too conservative.  My 401K and IRA are invested appropriately for my age (just shifted to a more conservative stance the past couple of months as I think the market is extremely frothy).

Wondering instead of adding to cash should I be expanding my thinking and taking bigger swings? I don't have time now to day trade and matter of fact the Game Stop stuff made be doubly sure it was time to step back with a bursting bubble pending.  I'm still skeptical about crypto.  But I could be very wrong about both.  Haven't dabbled in rental properties.  I could.  I do need some write offs so could use some funds to start a company.  Guess the question is should I be embracing more cash or doing the exact opposite and putting it to work.  Even if there is risk, knowing I have inflation risk or certainty with just keeping it in an online savings account.

My planner will want me to put more in the market based on historical return vs getting next to nothing with cash.

 

[-OZ-]

Bonus time.  Trying to figure out how much to keep in cash vs other investments.

I'm 58.  Goal is to work until 62 and then see.  Have a FO financial planner who I will also bounce this off of, but I think I know what he'll say so want to compare notes.

I've been maxing 401Ks for a long time, including catch up.  I also get RSUs that vest each year that are in effect cash and I don't touch that.  So both are growing nicely (though it would be phenomenal if the stock itself was growing).   What I've done with the bonuses the last 5 years is fund backdoor Roths for me and the Mrs to the max with our Planner and then after having an emergency fund we paid off the 2nd on our house.  (tore the house down to the studs years ago and had a second remaining for over $200K).  Chunked $50K, $50K and then $100K to pay that off in 3 years.  Zero debt other than 6 years left on a 15 year 2.75% note with a very manageable $2400 payment that's almost all principal now.  College done for 3 kids, 2nd wedding out of 3 this year and we've already covered a sizeable chunk after that.  Nice that expenses are falling off the ledger.

We typically live off of salary and then sock away the bonuses.  So idea was to make a 5-6 year run of getting cash in the bank.  Not laddering CD's but similar mentality with Ally.  Just peace of mind having cash if we need it whether it's an unexpected expense or an investment opportunity that comes up.  We will need cars at some point but drive so infrequently that we are willing to put that off as long as possible.  But I'm wondering if our thinking is too conservative.  My 401K and IRA are invested appropriately for my age (just shifted to a more conservative stance the past couple of months as I think the market is extremely frothy).

Wondering instead of adding to cash should I be expanding my thinking and taking bigger swings? I don't have time now to day trade and matter of fact the Game Stop stuff made be doubly sure it was time to step back with a bursting bubble pending.  I'm still skeptical about crypto.  But I could be very wrong about both.  Haven't dabbled in rental properties.  I could.  I do need some write offs so could use some funds to start a company.  Guess the question is should I be embracing more cash or doing the exact opposite and putting it to work.  Even if there is risk, knowing I have inflation risk or certainty with just keeping it in an online savings account.

My planner will want me to put more in the market based on historical return vs getting next to nothing with cash.

A good planner will take both your objective risk tolerance and your emotional risk tolerance into account.

You don't specify your current allocation so it's difficult to say what moves you should make.  You did say it was appropriate for your age, which is good but doesn't tell us if that's 70/30 stocks to bonds, total us only, the Paul merriman approach, or something else entirely.  I plan to be around 70/30 or 80/20 when I'm in my late 50s but that's just us.

I'd highly encourage you to listen to Roger Whitney, the retirement answer man. I find his pie cake approach makes a lot of sense. (And delicious) 

https://www.rogerwhitney.com/blog/310-crashes-retirement-and-bears-oh-my-investing-in-retirement-the-pie-cake

You have at least 4 years to "bake" your cake, it might make sense to start baking layer one now if you're concerned about the market but generally I'd wait for the layer until actually 2 years out. 

Layer 1 - this bottom layer is full of funds that are to be used in the next 2 years so it needs to be made of cash or cash-like investments

Layer 2 - this second tier will be funding years 3-6 You’ll want some stability in this layer, but also some income. It could be made of bonds that will be maturing, stable value funds, and some cash.

Layer 3 - this layer will have a very different looking pie than the bottom layers. The time frame of this layer is 6-10 years. There will be growth but it will be moderate growth. The objective here is income. A good mix could include bonds, real estate equities, but also consider growth. 

Layer 4 - now we are talking 10-15+ years ahead. This is the pie where you can get aggressive. You’ll want this pie to be growth-oriented with more risk and less bonds and cash. 

 

[wilked]

Bonus time.  Trying to figure out how much to keep in cash vs other investments.

I'm 58.  Goal is to work until 62 and then see.  Have a FO financial planner who I will also bounce this off of, but I think I know what he'll say so want to compare notes.

I've been maxing 401Ks for a long time, including catch up.  I also get RSUs that vest each year that are in effect cash and I don't touch that.  So both are growing nicely (though it would be phenomenal if the stock itself was growing).   What I've done with the bonuses the last 5 years is fund backdoor Roths for me and the Mrs to the max with our Planner and then after having an emergency fund we paid off the 2nd on our house.  (tore the house down to the studs years ago and had a second remaining for over $200K).  Chunked $50K, $50K and then $100K to pay that off in 3 years.  Zero debt other than 6 years left on a 15 year 2.75% note with a very manageable $2400 payment that's almost all principal now.  College done for 3 kids, 2nd wedding out of 3 this year and we've already covered a sizeable chunk after that.  Nice that expenses are falling off the ledger.

We typically live off of salary and then sock away the bonuses.  So idea was to make a 5-6 year run of getting cash in the bank.  Not laddering CD's but similar mentality with Ally.  Just peace of mind having cash if we need it whether it's an unexpected expense or an investment opportunity that comes up.  We will need cars at some point but drive so infrequently that we are willing to put that off as long as possible.  But I'm wondering if our thinking is too conservative.  My 401K and IRA are invested appropriately for my age (just shifted to a more conservative stance the past couple of months as I think the market is extremely frothy).

Wondering instead of adding to cash should I be expanding my thinking and taking bigger swings? I don't have time now to day trade and matter of fact the Game Stop stuff made be doubly sure it was time to step back with a bursting bubble pending.  I'm still skeptical about crypto.  But I could be very wrong about both.  Haven't dabbled in rental properties.  I could.  I do need some write offs so could use some funds to start a company.  Guess the question is should I be embracing more cash or doing the exact opposite and putting it to work.  Even if there is risk, knowing I have inflation risk or certainty with just keeping it in an online savings account.

My planner will want me to put more in the market based on historical return vs getting next to nothing with cash.

There’s a saying - once you win the game, stop playing. You don’t provide any numbers but I’m getting the impression that you’ve won the game. 
 

if I were you I would focus on a cash “bridge” to get me between retirement and SS. I’d also postpone SS as long as possible likely 70) as a long life “hedge” / insurance. Assume you’ll start tapping 401ks at 67 or so. So you need a five year bridge 

 

[NutterButter]

Haven't given it too much thought being about 16 years out, but I like the idea of having two years of cash to cover desired annual expenses and with the remainder, a certain percentage in stocks (120-age) and the rest in bonds.   I do highlight desire expenses b/c I do anticipate having about 40% of my budget be for discretionary spending (things like vacations, entertainment beyond the basics, spoiling the grandkids) that can be dialed back and along with the cash fund can get me through a crash or bear market.

 

[-OZ-]

Haven't given it too much thought being about 16 years out, but I like the idea of having two years of cash to cover desired annual expenses and with the remainder, a certain percentage in stocks (120-age) and the rest in bonds.   I do highlight desire expenses b/c I do anticipate having about 40% of my budget be for discretionary spending (things like vacations, entertainment beyond the basics, spoiling the grandkids) that can be dialed back and along with the cash fund can get me through a crash or bear market.

120-age is a fine RoT, but too conservative for me. I don't need 40% bonds at 60yo. Especially if they don't pay squat. 

 

[NutterButter]

120-age is a fine RoT, but too conservative for me. I don't need 40% bonds at 60yo. Especially if they don't pay squat. 

You're probably right.  I was originally thinking going 120-age prior to even considering cash, but then someone in this thread brought up the idea of a cash reserve and that began to grow on me so I should probably readjust.   

 

[yak651]

Bonus time.  Trying to figure out how much to keep in cash vs other investments.

I'm 58.  Goal is to work until 62 and then see.  Have a FO financial planner who I will also bounce this off of, but I think I know what he'll say so want to compare notes.

I've been maxing 401Ks for a long time, including catch up.  I also get RSUs that vest each year that are in effect cash and I don't touch that.  So both are growing nicely (though it would be phenomenal if the stock itself was growing).   What I've done with the bonuses the last 5 years is fund backdoor Roths for me and the Mrs to the max with our Planner and then after having an emergency fund we paid off the 2nd on our house.  (tore the house down to the studs years ago and had a second remaining for over $200K).  Chunked $50K, $50K and then $100K to pay that off in 3 years.  Zero debt other than 6 years left on a 15 year 2.75% note with a very manageable $2400 payment that's almost all principal now.  College done for 3 kids, 2nd wedding out of 3 this year and we've already covered a sizeable chunk after that.  Nice that expenses are falling off the ledger.

We typically live off of salary and then sock away the bonuses.  So idea was to make a 5-6 year run of getting cash in the bank.  Not laddering CD's but similar mentality with Ally.  Just peace of mind having cash if we need it whether it's an unexpected expense or an investment opportunity that comes up.  We will need cars at some point but drive so infrequently that we are willing to put that off as long as possible.  But I'm wondering if our thinking is too conservative.  My 401K and IRA are invested appropriately for my age (just shifted to a more conservative stance the past couple of months as I think the market is extremely frothy).

Wondering instead of adding to cash should I be expanding my thinking and taking bigger swings? I don't have time now to day trade and matter of fact the Game Stop stuff made be doubly sure it was time to step back with a bursting bubble pending.  I'm still skeptical about crypto.  But I could be very wrong about both.  Haven't dabbled in rental properties.  I could.  I do need some write offs so could use some funds to start a company.  Guess the question is should I be embracing more cash or doing the exact opposite and putting it to work.  Even if there is risk, knowing I have inflation risk or certainty with just keeping it in an online savings account.

My planner will want me to put more in the market based on historical return vs getting next to nothing with cash.

Are you guys looking at any long term care insurance?  Going to self fund it?  Recently had to move my mom into assisted living, she didn't have a huge nest egg and no long term care insurance.  The place is over $4k/month so $50k a year for one person can eat up a lot of savings if both you and the wife need this.  Did look a little after we did this and Dave Ramsey is saying don't buy any LTI until 60 years old so guess I have a little time (11 years) to figure that out

 

[Desert_Power]

There’s a saying - once you win the game, stop playing. You don’t provide any numbers but I’m getting the impression that you’ve won the game. 
 

I had the same thought reading that. If there is some company he has a passion for, that make sense. Otherwise it is the time to take less risks, not more.

 

[ConstruxBoy]

Bonus time.  Trying to figure out how much to keep in cash vs other investments.

I'm 58.  Goal is to work until 62 and then see.  Have a FO financial planner who I will also bounce this off of, but I think I know what he'll say so want to compare notes.

I've been maxing 401Ks for a long time, including catch up.  I also get RSUs that vest each year that are in effect cash and I don't touch that.  So both are growing nicely (though it would be phenomenal if the stock itself was growing).   What I've done with the bonuses the last 5 years is fund backdoor Roths for me and the Mrs to the max with our Planner and then after having an emergency fund we paid off the 2nd on our house.  (tore the house down to the studs years ago and had a second remaining for over $200K).  Chunked $50K, $50K and then $100K to pay that off in 3 years.  Zero debt other than 6 years left on a 15 year 2.75% note with a very manageable $2400 payment that's almost all principal now.  College done for 3 kids, 2nd wedding out of 3 this year and we've already covered a sizeable chunk after that.  Nice that expenses are falling off the ledger.

We typically live off of salary and then sock away the bonuses.  So idea was to make a 5-6 year run of getting cash in the bank.  Not laddering CD's but similar mentality with Ally.  Just peace of mind having cash if we need it whether it's an unexpected expense or an investment opportunity that comes up.  We will need cars at some point but drive so infrequently that we are willing to put that off as long as possible.  But I'm wondering if our thinking is too conservative.  My 401K and IRA are invested appropriately for my age (just shifted to a more conservative stance the past couple of months as I think the market is extremely frothy).

Wondering instead of adding to cash should I be expanding my thinking and taking bigger swings? I don't have time now to day trade and matter of fact the Game Stop stuff made be doubly sure it was time to step back with a bursting bubble pending.  I'm still skeptical about crypto.  But I could be very wrong about both.  Haven't dabbled in rental properties.  I could.  I do need some write offs so could use some funds to start a company.  Guess the question is should I be embracing more cash or doing the exact opposite and putting it to work.  Even if there is risk, knowing I have inflation risk or certainty with just keeping it in an online savings account.

My planner will want me to put more in the market based on historical return vs getting next to nothing with cash.

I like the rental/real estate idea, especially if it's something that interests you. 

I don't know if have any room for a Speculative Hedge in your portfolio but I do think Cryptocurrency can fill that roll. 

Congrats on a great, well planned financial life so far. 

 

[jamny]

I'm glad I held off on the new cash I put into my HSA. I sold SPTM and XT this morning and will wait out the market for a few days. Looks like I'll be able to get into ARK at a much nicer price.

 

[-OZ-]

You're probably right.  I was originally thinking going 120-age prior to even considering cash, but then someone in this thread brought up the idea of a cash reserve and that began to grow on me so I should probably readjust.   

Yeah, I can see, hypothetically if you spend $80k annual and are following the "4% rule", thus have $2 million liquid / invested (I call my FI funds but whatever), you can have $80k in cash, another $80k in your year 2 fund (let's assume bonds), that's 8% cash / bonds up front. A 70/30 portfolio after that ends up about ~$1.3M stock, $700k cash / bonds.  Mine will be closer to $1.6M stocks, $400k cash / bonds. 

 

[Judge Smails]

There’s a saying - once you win the game, stop playing. You don’t provide any numbers but I’m getting the impression that you’ve won the game. 
 

if I were you I would focus on a cash “bridge” to get me between retirement and SS. I’d also postpone SS as long as possible likely 70) as a long life “hedge” / insurance. Assume you’ll start tapping 401ks at 67 or so. So you need a five year bridge 

I love that thinking. Thank you. I knew cash gave peace of mind but didn’t think of it as a bridge. But you’re right. Pay for living expenses especially healthcare (much more expensive without work insurance. I hope they reduce Medicare age to 60 as discussed). What will it take to buffer in the years before I draw down retirement accounts/SS

 

[Judge Smails]

Are you guys looking at any long term care insurance?  Going to self fund it?  Recently had to move my mom into assisted living, she didn't have a huge nest egg and no long term care insurance.  The place is over $4k/month so $50k a year for one person can eat up a lot of savings if both you and the wife need this.  Did look a little after we did this and Dave Ramsey is saying don't buy any LTI until 60 years old so guess I have a little time (11 years) to figure that out

Yes. Long Term Care is included in all Monte Carlo simulations with our planner. Think he had $10-15K a month. Not sure what year we planned on it starting. 

 

[Judge Smails]

Yeah, I can see, hypothetically if you spend $80k annual and are following the "4% rule", thus have $2 million liquid / invested (I call my FI funds but whatever), you can have $80k in cash, another $80k in your year 2 fund (let's assume bonds), that's 8% cash / bonds up front. A 70/30 portfolio after that ends up about ~$1.3M stock, $700k cash / bonds.  Mine will be closer to $1.6M stocks, $400k cash / bonds. 

You’re not factoring in SS in this math, correct?

 

[-OZ-]

You’re not factoring in SS in this math, correct?

I'm not, but we probably could. 

I fully expect to use whatever we get in SS to give to charity and grandkids. 

 

[wilked]

I love that thinking. Thank you. I knew cash gave peace of mind but didn’t think of it as a bridge. But you’re right. Pay for living expenses especially healthcare (much more expensive without work insurance. I hope they reduce Medicare age to 60 as discussed). What will it take to buffer in the years before I draw down retirement accounts/SS

Is that last sentence a question? 
 

do a budget, and get a quote today for what it would cost to buy healthcare off the street (if you have no healthcare post retirement). What I’ve seen, and it makes sense to me, is to retire at say 62, do 2 years of low spend (ie dont go sail around the world), lots of staycation / explore the area around you with a car / learn what it feels like to be retired. As part of that you’ll validate your budget (ie costs to live retired). At the end of that you’ll be 64, maybe a few years from tapping 401k and beyond that SS. Then you can expand the budget with some trips, golf more, etc etc and draw down your cash reserves. Once 67-70 you start tapping 401ks, and at 70 you need to figure out how to spend the additional SS money (and rmd’s). 
 

but for me, I start slowly on retirement to get a few for it, then allow myself to pick up the spending / enjoyment after a year or two as you hit those milestones (67/70) 

 

[NutterButter]

I'm not, but we probably could. 

I fully expect to use whatever we get in SS to give to charity and grandkids. 

During plentiful years, same here for a lot of it.   But SS would change my cash balances b/c I could almost live off of that during lean years.

 

[Judge Smails]

Is that last sentence a question? 
 

do a budget, and get a quote today for what it would cost to buy healthcare off the street (if you have no healthcare post retirement). What I’ve seen, and it makes sense to me, is to retire at say 62, do 2 years of low spend (ie dont go sail around the world), lots of staycation / explore the area around you with a car / learn what it feels like to be retired. As part of that you’ll validate your budget (ie costs to live retired). At the end of that you’ll be 64, maybe a few years from tapping 401k and beyond that SS. Then you can expand the budget with some trips, golf more, etc etc and draw down your cash reserves. Once 67-70 you start tapping 401ks, and at 70 you need to figure out how to spend the additional SS money (and rmd’s). 
 

but for me, I start slowly on retirement to get a few for it, then allow myself to pick up the spending / enjoyment after a year or two as you hit those milestones (67/70) 

Thanks. Wasn’t a question. Good insight!

 

[-OZ-]

During plentiful years, same here for a lot of it.   But SS would change my cash balances b/c I could almost live off of that during lean years.

Fair point. Between SS and my two pensions, and health insurance, I might not need bonds at all.

It's interesting to see the difference between retiring when I could vs full retirement age. Roughly $1,000 monthly. I'm not sure it's worth working another 15 years for it, but maybe I should at least take SS into consideration. Not to mention more than another $1k in pension.

 

[NutterButter]

Fair point. Between SS and my two pensions, and health insurance, I might not need bonds at all.

It's interesting to see the difference between retiring when I could vs full retirement age. Roughly $1,000 monthly. I'm not sure it's worth working another 15 years for it, but maybe I should at least take SS into consideration. Not to mention more than another $1k in pension.

You saying those 15 years would replace some of the other 35 they'd be considering thus increasing your payout?   I know I could do better if I worked until 65 instead of 60, but I ain't do that just to get a couple more grand out of SS.  I might work more if  I don't mind still doing it and just taking a big chunk of easy money, but not just to increase my SS payout.   

 

[-OZ-]

You saying those 15 years would replace some of the other 35 they'd be considering thus increasing your payout?   I know I could do better if I worked until 65 instead of 60, but I ain't do that just to get a couple more grand out of SS.  I might work more if  I don't mind still doing it and just taking a big chunk of easy money, but not just to increase my SS payout.   

Yep. 

Of course I didn't start a career until 22, so retiring before 57 gives me some years where I was just working part time. It makes sense but it's something people in the FIRE community often overlook.  Especially when we don't include SS in our planning.

 

[Chadstroma]

Are you guys looking at any long term care insurance?  Going to self fund it?  Recently had to move my mom into assisted living, she didn't have a huge nest egg and no long term care insurance.  The place is over $4k/month so $50k a year for one person can eat up a lot of savings if both you and the wife need this.  Did look a little after we did this and Dave Ramsey is saying don't buy any LTI until 60 years old so guess I have a little time (11 years) to figure that out

I can't say Dave is right or wrong on this as it is not my area of expertise but Dave gives so much bad advice on areas I do know about that I wouldn't listen to him at all. He is a one trick pony with his no debt message.... which many people need to hear but beyond that when you get beyond that his advice for personal finance is pitifully horrible in areas of mortgage and investing. I would listen to the guys on this board well before anything he says. 

 

[yak651]

I can't say Dave is right or wrong on this as it is not my area of expertise but Dave gives so much bad advice on areas I do know about that I wouldn't listen to him at all. He is a one trick pony with his no debt message.... which many people need to hear but beyond that when you get beyond that his advice for personal finance is pitifully horrible in areas of mortgage and investing. I would listen to the guys on this board well before anything he says. 

Oh I agree that his advice is questionable. I was just mentioning the age part to see if others may have found out if there is a age that makes most sense to purchase this insurance. I’m leaning against any and self insure but would hate for me or the wife to burn thru a bunch and then the other has to live a meager retirement