Financial advice

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allvol90

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#1
Alright, needing a little advise. I’m not sure if a financial advisor or portfolio manager would be my route or what really.

So I’ve had 6 figures in a bank Cd for the past year and half. Been riding the 90 day cds as the are paying more %. I am now thinking since it’s matured to pull it and put it in a brokerage link. Put that 6 figures into an ETF maybe VOO, SPY, QQQ or something like that. I know there will be ups and downs but year over year it really outperforms any type of cd or high yeild saving account. The bank CD is really my savings but I’m ready to take the next step forward and create some wealth for my young 2 daughters. So I’m thinking the rough 10% YOY return from SPY along with my additional inputs to a brokerage account will compound so much faster and hopefully create that wealth. I know the capital gains situation on short and long term but I shouldnt have to pull hardly any out.

does anyone here deal with this kind of stuff or can lead me in the right direction?
 
#2
#2
allvol90 said:
Alright, needing a little advise. I’m not sure if a financial advisor or portfolio manager would be my route or what really.

So I’ve had 6 figures in a bank Cd for the past year and half. Been riding the 90 day cds as the are paying more %. I am now thinking since it’s matured to pull it and put it in a brokerage link. Put that 6 figures into an ETF maybe VOO, SPY, QQQ or something like that. I know there will be ups and downs but year over year it really outperforms any type of cd or high yeild saving account. The bank CD is really my savings but I’m ready to take the next step forward and create some wealth for my young 2 daughters. So I’m thinking the rough 10% YOY return from SPY along with my additional inputs to a brokerage account will compound so much faster and hopefully create that wealth. I know the capital gains situation on short and long term but I shouldnt have to pull hardly any out.

does anyone here deal with this kind of stuff or can lead me in the right direction?
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1. Make sure you are maxing out 401K, HSA, and IRA before you do this. If you are saving long-term, use no-tax or tax-deferred savings vehicles first. Prefer Roth IRA and Roth 401K to traditional in most cases.

2. Id go to one of the 4 low cost providers (Vanguard, T Rowe, Schwab, Fidelity). They all have some variation of VOO, SPY, QQQ. Im unsure about Schwab but they all have a decent blended mutual fund (Fidelity has Puritan and T Rowe has Capital Appreciation) if you dont want to be 100% stock.
 
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#4
#4
BigOrangeMojo said:
Before getting to Step 2 above.


Make sure you have some type of college savings plan for the two girls

Make sure you have consumer debt paid off

Have some type emergency fund thay covers 3 months of expenses
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I didn't know about a 529 plan until a few years later but ended up catching the oldest one’s account up. We could put more in it as we are doing 200$ a month each from the day they were born. I’m honestly hoping to eat the college bill out of pocket and let the 529 roll into an IRA for them.

On Wednesday we will be 100% debt free other than living expenses with pretty new vehicles. Her nice car has 30k miles and my “Farm truck” has 40k miles. We only drive those when needed and have separate work vehicles. We only average about 5k miles a year on both our nice cars each.

In checkings we have too much for it to be a checkings. It needs to be invested in some way. There’s over 50k in it.

We max her Roth IRA and last year was my first year maxing out my 401. I do not have a IRA but ended up learning the benefits of the HSA so this is just my 2nd year with it. The first year hit it pretty hard but I’m working on that.

Am I wrong to think this with the CD’s vs investing? I am not a great stock market person but numbers And percentages don’t lie. Now which one is safer…. Depends on how you look at it. Markets are tons more volatile that a cd but historically always recover in the long run. Idk there’s got to be more ways for your money to work for you than bank accounts. There so much stuff floating around on the internet that you can go down the rabbit hole quickly. I also own a duplex and not sure if real estate is the answer I’m looking for. Real estate is a true long term investment but is really hard to get into right now in my geographic location unless you have one that falls into your lap.

We are pretty young 35/33 but feel like I’m so far behind and I can’t get it out of my head. I want to be the guy that made it and that came from nothing and wasn’t given the silver spoon. Which is contradicting because I want my girls to never have to worry about anything.

Theres a ton of people that woul love to be in my situation and I’m grateful for the opportunities I have been given. But there’s something I’m missing
 
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#5
#5
allvol90 said:
I didn't know about a 529 plan until a few years later but ended up catching the oldest one’s account up. We could put more in it as we are doing 200$ a month each from the day they were born. I’m honestly hoping to eat the college bill out of pocket and let the 529 roll into an IRA for them.

On Wednesday we will be 100% debt free other than living expenses with pretty new vehicles. Her nice car has 30k miles and my “Farm truck” has 40k miles. We only drive those when needed and have separate work vehicles. We only average about 5k miles a year on both our nice cars each.

In checkings we have too much for it to be a checkings. It needs to be invested in some way. There’s over 50k in it.

We max her Roth IRA and last year was my first year maxing out my 401. I do not have a IRA but ended up learning the benefits of the HSA so this is just my 2nd year with it. The first year hit it pretty hard but I’m working on that.

Am I wrong to think this with the CD’s vs investing? I am not a great stock market person but numbers And percentages don’t lie. Now which one is safer…. Depends on how you look at it. Markets are tons more volatile that a cd but historically always recover in the long run. Idk there’s got to be more ways for your money to work for you than bank accounts. There so much stuff floating around on the internet that you can go down the rabbit hole quickly. I also own a duplex and not sure if real estate is the answer I’m looking for. Real estate is a true long term investment but is really hard to get into right now in my geographic location unless you have one that falls into your lap.

We are pretty young 35/33 but feel like I’m so far behind and I can’t get it out of my head. I want to be the guy that made it and that came from nothing and wasn’t given the silver spoon. Which is contradicting because I want my girls to never have to worry about anything.

Theres a ton of people that woul love to be in my situation and I’m grateful for the opportunities I have been given. But there’s something I’m missing
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You borrowed to buy the vehicles? What interest rate?

What does 3-6 months of living expenses look like for you? You have 2 young daughters; $50k might not be unreasonable to have in a checking account. What would you do if something happened and you had no income for some period of time? Having some kind of cushion, even if it feels a little excessive, can bring peace of mind.

Assuming you have no consumer debt, you're taking full advantage of every tax-advantaged option you can (maxing out all tax-advantaged retirement accounts), and you have your cash cushion, extra cash you have sitting around should be invested, probably mostly in equities. You are young and the math says you should have a fairly aggressive, equity-heavy asset allocation.

There's tons of very lost options that will give you the market return. I wouldn't go too far down the rabbit hole; VOO/SPY/others track the S&P 500, if you want a growth emphasis you can do QQQ or VUG, if you want some international exposure VXUS. I personally am not much of a bond guy myself; everything I have invested is either in equities or higher yielding cash equivalents (e.g., PULS or SGOV). Both of those are going to pay you more than a CD plus they are ETFs. It isn't locked up for some period of time like a CD is.
 
#6
#6
I paid cash for my truck. It was 2.2% for her car but it will be paid off on Wednesday

Checking is actually in the 70’s at the moment but was going to drop it down to the 50’s but still feel like thats too much but at the same time I’ve always liked a big cushion for the reasons you just explained but at the same time that money is only diminishing in valve as inflation is eating it up

The only debt I have is monthly living expense. I could open myself an IRA and take advantages of the tax breaks.

I feel like I keep chasing my tail on what to do. Safest best of course is cds but they only generate x amount and I’m sure the next term will be lower percentage if trump gets his way. Idk I’m just kind of lost on what to do.
 
#8
#8
BigOrangeMojo said:
Your bank paying anything on checking account? You can probably find a credit union or SPAXX (Fidelity) where you can earn 3-4% on that cash...
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SPAXX earns 5% and is a great option to hold emergency funds, or as an alternative to CDs. I don't know why anyone would invest in CDs at the rate they pay right now.
 
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#11
#11
kiddiedoc said:
SPAXX earns 5% and is a great option to hold emergency funds, or as an alternative to CDs. I don't know why anyone would invest in CDs at the rate they pay right now
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Didnt know you can just sit cash in a Fidelity account and it will draw a percentage. The new cd rate is 3.85 on a 90 day. I have until Thursday to figure out if I’m gonna pull it or not
 
#12
#12
allvol90 said:
Didnt know you can just sit cash in a Fidelity account and it will draw a percentage. The new cd rate is 3.85 on a 90 day. I have until Thursday to figure out if I’m gonna pull it or not
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Yes, by default settled cash in a Fidelity brokerage account is held in SPAXX. I had a small amount of inheritance money in a CD a couple of years ago on an introductory rate (4% at the time), and when I found out about the Fidelity option, I moved it there upon maturity. Paying monthly, you also get the small advantage of compounding.

The other benefit over CDs, of course, is that it can be accessed any time without penalty.
 
#14
#14
kiddiedoc said:
You're right, it does fluctuate and is a little below 4 right now. It was over 5 not too long ago.
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Unsure about Knoxville but credit unions in Memphis area are paying 5-6.25% on the first 10K in checking accounts.

For example, Orion Federal Credit pays 5% up to 10K. Really the only qualification is you have to spend $500 on your debit card and have a $500 direct deposit. First South is 6.25% on first 10K but does require more in volume on debit card usage...
 
#16
#16
A Treasury Direct account is a safe option for some investable funds. But real returns need to factor in inflation and taxes.


Charlie and Warren discuss inflation.



The VTI, VOO, SPY, and QQQ exchange traded funds are pretty safe equity options with a lot of built in diversification. But be prepared to not convert to cash for 5 years or more to increase the odds of staying ahead of inflation. The broad averages aren’t real inexpensive right now after having solid runs.

Get as much money into a Roth IRA as possible. And keep it there.

If buying individual stocks, buy good companies for the long run. Stay away from penny stocks unless you just want to throw away money.

How long you stay in equities is more important than when you get in.
 
#18
#18
Thunder Good-Oil said:
Don’t buy whole life insurance. If you need life insurance buy term life and invest the difference.

Consider purchasing long term care insurance when you are still young.
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Buy term life. 15 or 20 year term. Probably 20 yr at OP's age.

Absolutely avoid whole life. Horrible product.

33 is too young to buy long term care in my opiniom. Id rather put that monthly payment in market and take another look at that between 45-50.

Plan for next 15-20 years for OP should be throwing as much into investing as possible.
 
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#19
#19
Local credit unions down here aren’t the best.

im not going to jump into individual stocks. I’m not good enough for that. That’s why I like the etf’s but I feel like my profile should be more diversified than only etfs but idk. Just looking at the YOY return rates and knowing the etfs historically Bounce back after a few bad years is what caught my eyes. So much better rates than a bank.

With me maxing out my 401, other than the tax break with it being Roth for tax purposes why the Big push? Just curious as my only take is tax benefits.

Life insurance is one thing I have zero knowledge on. All I know is don’t buy whole life. With us having zero bills and if nothing happened during that 15-20 years wouldn’t that just be money thrown away? Same as an 80-20 health insurance compared to HSA. The HSA gets saved but your 80-20 premium you’ll be gone.

This is why I’m here asking questions. I need to learn from those wealthy as wise ones 🤣
 
#20
#20
Be disciplined or don’t bother with retirement accounts. If you’re inclined to withdraw those funds before retirement age to buy a bigger truck, or a bass boat, or a cruise then don’t bother building wealth with those funds.

No telling what happens to the IRS code in the next 30 or 40 years, but Roth IRAs print money. Regular IRAs just DEFER taxes and they are taxable at death. Regular investment accounts WITHOUT the regular (traditional) IRA account wrap get the stepped up basis tax treatment. One of the best tax advantages available if leaving appreciated assets to benefliciaries. Funds to be willed to charities (or your church) are suitable to be put into regular/traditional IRAs since those organizations are tax exempt.
 
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#21
#21
BigOrangeMojo said:
Buy term life. 15 or 20 year term. Probably 20 yr at OP's age.

Absolutely avoid whole life. Horrible product.

33 is too young to buy long term care in my opiniom. Id rather put that monthly payment in market and take another look at that between 45-50.

Plan for next 15-20 years for OP should be throwing as much into investing as possible.
Click to expand...

Long term care insurance for the young isn’t a bad idea if it’s available at a good price. 40 year olds occasionally need life long care as well as old fellers. But at a younger age the disabled person could get divorced, go bankrupt, and take advantage of government programs. Can’t live with the ex-spouse though I think.
 
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#22
#22
allvol90 said:
Local credit unions down here aren’t the best.

im not going to jump into individual stocks. I’m not good enough for that. That’s why I like the etf’s but I feel like my profile should be more diversified than only etfs but idk. Just looking at the YOY return rates and knowing the etfs historically Bounce back after a few bad years is what caught my eyes. So much better rates than a bank.

With me maxing out my 401, other than the tax break with it being Roth for tax purposes why the Big push? Just curious as my only take is tax benefits.

Life insurance is one thing I have zero knowledge on. All I know is don’t buy whole life. With us having zero bills and if nothing happened during that 15-20 years wouldn’t that just be money thrown away? Same as an 80-20 health insurance compared to HSA. The HSA gets saved but your 80-20 premium you’ll be gone.

This is why I’m here asking questions. I need to learn from those wealthy as wise ones 🤣
Click to expand...

If you are healthy, you can probably get $1M of term life insurance for the price of taking your family out to Chick Fil A once a month. It is ridiculously cheap for healthy people.

If something happened to you, your spouse wouldnt have to worry about replacing your income....
 
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#23
#23
I’ve wondered about HSAs. If somebody can pay for health care without dipping into the HSA, why not do that and let the health savings account grow and exploit the tax advantages. I guess if the HSA grew very large and exceeds likely out of pocket health care expenses then it makes sense.
 
#24
#24
Thunder Good-Oil said:
I’ve wondered about HSAs. If somebody can pay for health care without dipping into the HSA, why not do that and let the health savings account grow and exploit the tax advantages. I guess if the HSA grew very large and exceeds likely out of pocket health care expenses then it makes sense.
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Keep cash equaling out of pocket maximum and cash fund any emergencies. Didnt touch HSA for spouse's multiweek hospital stay last year. Let that thing grow....
 
#25
#25
Thunder Good-Oil said:
Long term care insurance for the young isn’t a bad idea if it’s available at a good price. 40 year olds occasionally need life long care as well as old fellers. But at a younger age the disabled person could get divorced, go bankrupt, and take advantage of government programs. Can’t live with the ex-spouse though I think.
Click to expand...
Any recommendations
 
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