keeping 200k safe secure and possibly growing

[springer11]

Have 200k in cash, what should I do, married, 53, no debt except mortgage of 235k on 375k value, annual income over 100k.

want to keep it safe, what would you do?

[bjl584]

Without knowing any other information about your finances, about the only thing that you can do right now is keep it in a money market account or build a CD ladder.

[feh]

Have 200k in cash, what should I do, married, 53, no debt except mortgage of 235k on 375k value, annual income over 100k.

want to keep it safe, what would you do?

You haven't provided enough information to formulate a recommendation. Whatever you do should fit into your investing strategy.

Read this page: bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

[Goldy]

Will you be needing this money anytime soon? How are you sitting for retirement, how much do you have there?

The safest place would be in a bank account but you wouldn't see any growth there. Another very safe place would be to throw it at your mortgage because it would essentially be growing at whatever your interest rate is (4%) which is probably a whole lot better than any CD or other safe investment will get you. Then over the next year you could hammer out the remaining 35k on the loan and before you know it no more mortgage!

[springer11]

more info

as you can see I am new to having extra money, just paid off all debt, we have a 401K which has 2200 a month going in and a match of about 300 a month. roth iras, and all the toys and gold we need. just don't want to lose this 200k, just in a bank account now, what is a safe investment.

[springer11]

the mortgage is at 3% and I pay 2K a month with 400 to interest and 400 to escrow, the rest goes to principal.

[Goldy]

Probably the safest investment with some return would be a CD ladder like bjl584 suggested. Ally has a 5yr CD with a rate of 2.00% or other shorter term CD where you can raise your rate if interest rates increase that currently pays 1.2%

How much do you have saved for retirement? Not looking for a monthly allocation but a sum of all of the accounts.

Do you have a end goal for the money?

Vanguard has some capital preservation funds that focus on cash, bonds, and dividends that might work for you if you are ok with a small amount of risk.



If it were me and I was 100% on track for retirement (roughly 750k saved by 53) then I would make sure I have 6 months of living expenses saved in a bank account and throw the rest at my mortgage because its a better return than investing in low risk avenues. Once that is paid off and I no longer had a 2000/mo housing expense I would start looking at when I could retire.

[Petunia 100]

The only two "investments" which guarantee your principal are cash equivalents and debt repayment.

Have you considered recasting your mortgage? You may need to pay a fee to recast. You pay down a chunk of principal and the lender recalculates your monthly payment going forward. Because the term is the same, the monthly payment goes down.

If you don't want to do that, build a CD ladder. Online banks offer higher rates than brick and mortar banks. Even so, you won't approach the 3% you are paying on your mortgage.

Search on BankRate for the highest rate you can find.

http://www.bankrate.com/

[springer11]

I don't have the 750k saved for retirement, I have about 70 in the 40k but expect that to increase rapidly now that we are putting in 2500 a month. So total every month I have 1200 going principal on my mortgage, 2500 in the 401k, about 2K a month in gold purchases, thought that was enough saving of the monthly income.

It has only been six months since we paid off all the debt and now the paycheck doesn't all go to the bills. I have learned that we are way more careful how we spend now then we did when we just used credit. Thanks for the advice everyone, I am terrified of financial advisors, this is so much easier.

[snafu]

Welcome to SA. We have different backgrounds but genuinely try to answer questions and offer helpful suggestions.

Congratulations on paying down your debt which I'm guessing means car loan and credit cards. What is the plan going forward? Will you avoid loans and pay off CCs without fail, at least two business days before their due date? Do you know your [FICO] credit score? Do you anticipate any major purchases or big expenses like children's wedding etc?

As bj and feh explain, you have not offered enough information. Do you expect to continue working for the next 12 years? Is it your plan to continue living in the house after retirement or would you and DW prefer to downsize? What date will your existing mortgage be paid in full without any change to the plan? The rule of thumb is to plan to withdraw no more than 4% of your retirement fund each year. Have you looked after things like Advance Care Directive and up-to-date Will? What is your investment risk tolerance?

http://www.bankrate.com/finance/investing/risk-tolerance-quiz.aspx

[springer11]

wow, I am going to have to think about SNafu's questions, I will be back with that information.

[Petunia 100]

I don't have the 750k saved for retirement, I have about 70 in the 40k but expect that to increase rapidly now that we are putting in 2500 a month. So total every month I have 1200 going principal on my mortgage, 2500 in the 401k, about 2K a month in gold purchases, thought that was enough saving of the monthly income.

It has only been six months since we paid off all the debt and now the paycheck doesn't all go to the bills. I have learned that we are way more careful how we spend now then we did when we just used credit. Thanks for the advice everyone, I am terrified of financial advisors, this is so much easier.

Did you start partway through the year? 2500 per month = 30k per year, which exceeds the maximum.

After you have maxed your 401k and Roth IRAs, if you still have more to invest, you can fund a taxable account.

[Goldy]

I don't have the 750k saved for retirement, I have about 70 in the 40k but expect that to increase rapidly now that we are putting in 2500 a month. So total every month I have 1200 going principal on my mortgage, 2500 in the 401k, about 2K a month in gold purchases, thought that was enough saving of the monthly income.

It has only been six months since we paid off all the debt and now the paycheck doesn't all go to the bills. I have learned that we are way more careful how we spend now then we did when we just used credit. Thanks for the advice everyone, I am terrified of financial advisors, this is so much easier.

I think the rate at which you are saving is good. There are many ways to calculate how much money you will need for retirement but the easiest one I have seen is 8x your income (or 25x your annual expenses) at retirement. I assumed you made 120 so you would roughly need 960k to retire, lets round that up to a million.

Even if you work until you are 65 and contribute the full 2500/mo to retirement after 12 years at 6% interest you will have 668k, just over half way. To extend this you could work longer, invest more, or lower your expenses.

If you put 100k into your retirement accounts and kept everything else the same your maturity value goes up to 874k and with the full 200k invested it increases to 1,079k.

The gold investment seems like a bit much to me. I think the standard thinking is to have no more than 5-10% of your portfolio in precious metals so I would drop your contributions down to 500/mo in gold and increase the retirement savings with the remainder. Does your wife have a Roth IRA? If you file jointly it doesn't matter if she works or not and that would be a great place to invest.

If you added 100k to your retirement accounts, reallocated 1500 from gold purchases to retirement investing for a total of 4k a month in 12 years at 6% you will have ~1.2m and should be set nicely for the future.

[97guns]

I don't have the 750k saved for retirement, I have about 70 in the 40k but expect that to increase rapidly now that we are putting in 2500 a month. So total every month I have 1200 going principal on my mortgage, 2500 in the 401k, about 2K a month in gold purchases, thought that was enough saving of the monthly income.

It has only been six months since we paid off all the debt and now the paycheck doesn't all go to the bills. I have learned that we are way more careful how we spend now then we did when we just used credit. Thanks for the advice everyone, I am terrified of financial advisors, this is so much easier.

i love your gold holdings but only if your buying the physical stuff, i think better than gold atm is silver, the silver to gold ratio is around 75-1 which i pretty high making silver relatively cheap. i also like palladium, very rare and tight supplies only getting tighter

i would throw a nice portion of that 200K at metal but im a gold bug, i just bought 1/2 that amount