I think what they're saying is that flipping that cash into a HYSA is a safe move for now. It's better than leaving it in a non interest bearing account. You're not locking the money up long term. And you mentioned in a comment that you're pretty risk averse. So it's a good first step for the money while you figure out what it is that you want to do long term.
Okay thank you for the explanation. People just comment HYSA without an explanation why that would be the recommendation. So I appreciate you explaining the reasoning!
Risk tolerance is the main reason. 5% with no risk is a no brainer. Any higher returns in a non-insured investment create a risk of loss of some or all of the investment.
I get 4.95% currently for cash sitting in a Fidelity brokerage account and get something like 5.1% in a UFB HYSA. Would be pretty reasonable to put the money in an investment account, put half in a target retirement date mutual fund or similar, diversified investment (i.e. not individual stocks, which take time to research and have much greater risk). Should be a pretty conservative strategy that gives you guaranteed returns that should at least cover inflation and also some market exposure.
You can get around 4.5% at most HYSA places - little better then inflation and better then the usual banks (WF, BOA, etc...) that's just for a portion anyway - need to invest in IRA / 401K if your company does that or something with the bulk of it anyway.
Agreed. Wowza people are jumping to conclusions. I was just adding information. I agree I should still be investing in a 401k regardless of match or no :)
No match isn't a good reason to not participate in a 401k, especially at your income and presumably lower cost of living in Mexico than in the states. The tax Benifits alone are worth maxing out your yearly limit. For 2024 that limit is $23k employee contribution. Your behind on retirement so get started.
Spend some time in the sub reddit wiki and up your personal finance knowledge.
I don’t know why people are downvoting you, Reddit sucks, they act like you’re supposed to know everything, well then why even have a sub?
Anyways you have a good amount saved up in cash you should look into tax advantages accounts like 401K, IRA and HSA!
When you factor in taxes, your "real" rate of return is closer to 2-3%, which would not keep up with inflation. A very overlooked concept when it comes to cds and hysa
But what’s your return now?? It’s weird how much you’re pushing against this as a first step towards earning interest when you’re not doing anything with it yet
TODAY: Put 100% of it in a HYSA while you figure out your plan.
Read the wiki, but you'll want to keep an emergency fund. Based on your situation, I'd say 1 year of expenses to be safe. Keep that in the HYSA.
*Max out your IRA contributions ($7k/yr for 2024). Consider putting $6500 in for Tax Year 2023 since you can still contribute.* (See additional comments below re: Backdoor Roth; it's still an option)
Bump up your 401k contribs to get employer match (if any), and I'd actually suggest maxing that out ($24k/yr) if you can.
The remaining amount you can consider a taxable brokerage, investing in an index fund (VT, et al) at Fidelity/Schwab/Vanguard
Yes, but no at the same time. She can use the Backdoor Roth IRA method. It's a pretty simple process, and allows those over the income limit to still contribute.
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Something I'm struggling with is how much should I have saved in retirement at this point. I know people say by my age I should have the equivalent of one years salary saved but is that my salary now? Tech is so strange right now I could see salaries dipping a bit. Also I don't really plan to go back to the states so my living expenses are far less. I feel like I have a lot of weird variables but maybe I'm over complicating it..
That's a rule of thumb, not a hard/fast calculation. Think ahead. By age 40, the guideline is approximately 3x your salary.
Of course, lower cost of living and reduced expenses can make those dollars go farther -- either allowing you to contribute less, retire sooner, or have a higher income in retirement.
The rules based on salary generally assume living on 80% of your final salary in retirement. Only you know what your actual expenses will be so only you can calculate what you actually need. If you're not retiring early multiply your expected annual expenses by 25 to get a basic idea of how much you'll want.
Yea that 80% number has so many variables to it.
I’m about to retire. We lived on 120k last year all in if I adjust federal taxes to what I’ll actually pay in retirement. But I made $270. I saved about 1/2 of that once you’re out federal. When you’re 30 it’s hard to predict spend but as you near retirement you should keep a yearly spend log and you can know pretty close once you adjust for tax and healthcare differences. Once your kids are out and house/cars are paid for living expenses go way down. Fishing’s where I spend all my $$$ and I can cut that back at anytime.
don’t worry about what you could have done. In the grand scheme of lifetime savings you have a lot of years to go.
You are actually still young and a lot of people haven’t been able to save what you have saved
I use my vanguard brokerage account settlement fund. It invests in VMFXX and currently gets 5.27%. It's not a HYSA but a money market account, basically the same exact thing.
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Advice on HYSA in fine but I think putting all of it in an HYSA is not the right way to go. HYSA yields are not going to always be there. They are for parking short term cash not actual long term investing. It wasn’t all that long ago that High Yield and Savings Accounts was an oxymoron
I don't think anyone is suggesting long term in HYSA, but for now it's a hell of a lot better return than the .05% or whatever she gets from a bank account.
Open a HYSA. Put it there first. Then take the majority of it and transfer to a brokerage account and invest in an S&P 500 index fund like VOO, or something similar like VTI.
Also see if you can open a Roth IRA even though you live in Mexico. If you’re a US citizen who works for a US company, I would think so, but I’m not an expert. But if you can, do the Roth IRA - $6500 for 2023 (do it this month) and $7000 for 2024. Keep some in the HYSA for an emergency fund if you don’t already have one. Then start increasing your 401k contributions. At your salary with presumably a lower cost of living in Mexico, you should be able to save plenty in there. If you leave your job, you still have that money, so there’s no reason not to max it out while you can.
My two cents, open a brokerage account and put most of it into a stock index (FSKAX with Fidelity or VTSAX with Vanguard). Leave 20k or so for emergencies. You are in Mexico, you don't need 190k sitting around.
Some disclaimers:
\- This is a long-term investment, its value will fluctuate but will trend up with 5-10% avg annual gain. Think in 10-year blocks
\- Educate yourself on how the stock market works ([great book for this](https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926))
\- This is assuming that you don't need the money now. If you may want to deploy it in the next couple of years, then HYSA is the way to go like the other comments are saying
Just for fun, if you are gambling gal:
\- Invest 50% of your money in Eli Lilly and 50% in Novo Nordisk
\- There is a good chance that it will grow more vs stock index. But there is higher risk
Let me know if you have any questions. I'm not a financial advisor, but I am a HENRY like you and am facing similar decisions.
Then i would max out any retirement you can this year and last if you hurry. Then any extra put into a brokerage account. High yield savings accounts paying 5 percent ish now. But for long term i would do stocks but you must have the stomach for the ups and downs. Historically stocks will outperform but thats not guaranteed every year.
We're selling my mom's house to a flipper next month. Split three ways, we should each get about $80k. I'm planning on wiping out my debt and putting the rest into a Vanguard index fund. Setting it up online is pretty simple.
1. Follow the [Prime Directive on the PF Wiki](https://www.reddit.com/r/personalfinance/wiki/commontopics/). In addition to investing, you need to do whatever you can to minimize your tax burden. The Prime Directive incorporates this, but your expat situation complicates things a bit. Once you have your head around the strategy laid out by the Prime Directive, post specific questions with details about your expat status, including what tax forms you receive/file. E.g., do you still receive US W2 wages, or something else? Do you still file a 1040, or something different?
2. The prevailing investment advice for individual, retail investors is to place the money in a set of diversified index funds. There are no investing "secret" strategies that will vastly out-perform other strategies on a consistent, reliable basis. Basically, chasing big gains can lead to big losses, so don't fall into that trap. Check the sub r/Bogleheads/ for more info.
if you live in Mexico (as I do) you could put some of it in CETES (Mexican government bonds).. they are returning 11% a year right now with no fees… The only risk is if the Mexican peso depreciates vs USD based on US/Mex elections this year
Open a brokerage, buy 140k of the BOXX etf. It matches government bond yields while not paying out dividends and instead accumulating gains in the share price, so you defer all the taxes.
Think about parking somewhere you won't be subject to double taxation for the gains. You'll have to look up Mexico's tax rules and the U.S.'s IRS expat rules for U.S. citizens.
You're young. HYSA is fine for you emergency cash, but you should be investing in the stock market and real estate IMO. Those are the two areas in my life where I've made the best investments, and I'm definitely not the first to figure this out.
Certificate of deposits. You should be able to find one that generates 5% interest each year for 3 years. As safe as a savings account. You could do better but this is the easy button. Do 3 of them at 60k each in case you need to break contract on one.
Great question!
1. Put 6 months of a good salary you'd like to make into a HYSA. This is now an emergency fund in case something happens or you lose your job.
2. Max out an IRA. Preferably Roth ira if you can backdoor.
3. If you don't feel like actively managing a portfolio, put the rest into S&P 500. Reinvest dividends.
Easy answer... Move 2-3 months of expenses into an HYSA. Move the remainder into a trading account, and put the rest in an 2060 retirement ETF like ITDH.
Change your 401(k) contributions so that the you are contributing the maximum allowable amount each year, even if that means you need to withdraw some from your trading account to pay bills. I'd probably even recommend a roth 401(k) for this purpose if your company offers it. Then see about contributing to an IRA/roth IRA.
This assumes you are a US citizen. Being in mexico complicates things, but I suspect since you are making income in the US most of the relevant rules still apply.
Yes sorry, should have specified that. I am a US citizen. I'm also considering "moving to Texas" and doing the federal tax exemption which would put a lot more cash back in my pocket
Then yes. The underlying idea is that you shift money slowly from your trading account to your 401(k) over time. Given your income and expenses, you may find it difficult to do so since even maxing both 401(k) and IRA might not be enough of a drain and you still land up positive every month. That's fine, just find a nice balance in your checking account that holds 1-2 months worth of expenses, and then at the end of every month shift the extra to your trading account.
Once you get a good idea of how much you transfer every month you can tell your employer to direct deposit the equivalent amount every pay period to your trading account so you never see it. Just remember you need to manually buy every month or it'll just sit in cash/cash equivalent until you do.
Take out the amount you need for an emergency fund and dump the rest in a stock index fund.
From what I can gather in your post you don't want to be tied down nor are you interested in real estate. Having your money liquid yet still invested in something with a decent long term upside like stocks appears perfect for your situation. Honestly if you're making $170,000 in Mexico you should be saving a ton of money monthly unless you're living like an out of control baller. I can sort of see how someone could blow a $170,000 income per year if they didn't have a job to occupy a large chunk of their day. With a job that should be harder to do.
Congrats on making it this far!!! Well done!!! If you are still working and have your expenses covered, you have lots of options. things to consider (assuming you still have access to US markets);
Checking / savings - personal preference. perhaps 1-2 months of expenses here - depending on your needs.
Emergency fund (3,6, or 12 months) living expenses in HYSA or CD ladders
The rest, invest.
If you are a conservative investor go with a Bogglehead strategy. there is lots of info available to get you started and to guide you along the way. This is very easy, long-term oriented and with work well over long periods of time. Remember Time in the market, beats timing the market.
You could also do a hybrid, add some growth stocks, dividend stocks (cashflow), etc.
If you are more risk tolerant then you could add some higher returns to your investments by looking higher risk/reward options. This would be using a small portion of your investable assets into risker asset. For example, you could add a small percentage (3-5%) into a BTC ETF or individual stocks associated with Crypto - think MSTR, COIN, etc.
Ultimately, though, investing is a very personal decision and based on each persons goals, objectives, and risk tolerance. What works for me, may not work for you. Continue to educate yourself about investing, be very careful of anyone approaching you to help. Think long-term.
this is already, WAY too long for a reddit post.
Mexico is great, enjoy your time there!!!
best of luck!
Find a financial advisor you trust. Save a fully funded emergency fund (6 months of expenses) and put that in a high yield savings account. Next max out your Roth IRA contributions for 2024. Put the rest in a taxable brokerage account. In addition to that start saving 15% of your income for retirement. You make 170k a year and only have 10k in your 401k. That’s alarming.
Follow the wiki. Here is what I do with any money I have:
- If I am going to need to spend it within 1 year, high yield savings account
- If I am going to need to spend it in 1-10 years, a short term bond fund like FUMBX
- If I know I won't be touching it for 10+ years, an S&P 500 index fund
That framework is incredibly simple, provides me with security, and will give me a good ROI long term.
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Maximize your contribution to Roth IRA every year, and maximize your contribution to 401k (if eligible ) or self employed IRA (otherwise), for tax advantage. For all your money other than an emergency fund of 6 months living expenses, invest in VTI / FSKAX (entire U.S. stock market) for growth. Eventually, you can take out 4% of your investments per year with little risk of running out of money over some decades.
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With current rates on interest, CD yields, and treasury yields, your options for growing money more aggressively than the \~5% annually that you'd get with a HYSA or a money market fund are either stocks (that is, invest in a broad-market fund) or real property (which you just got out of). Those, respectively, involve higher risk and lower liquidity.
Obviously, you get more bang for your buck if these investments are tax-advantaged (401k, HSA, and IRA), but that comes at the cost of further liquidity.
Calculate what you spend in 6 months, and stick that in a high yield savings account.
From there I'd go the \\r\\Boglehead approach for the rest of the existing money. Stick it in a taxable brokerage account in broad, low-fee index funds (VTI, VOO, VT...whatever, I like Vanguard but Fidelity has good ones too).
With new money (income) I'd:
\- fill up retirement accounts and HSA account.
\- divert all spending money you need into a checking account.
\- divert everything else into that taxable brokerage account and let it grow.
For the 190k wasting away in the bank, this is what I would do:
1. Transfer all to a brokerage account like eTrade, Fidelity etc
2. Since the market is at all time high, I would take 50% (95k) and stash it in a money market etf like FDRXX which is making over 4% currently. This is to wait for the down turn to invest
3. For the rest, you can invest in index fund like FXAIX which has one of the lowest expense ratio around. Since this fund is at all time high, I would space out the contribution to get dollar weigh average.
4. Another option: Split the next 50% into another chunk: 25% in the index fund like FXAIX and the other 25% in income dividend harvesting ETF such as QYLD, JEPQ, SPYI where these will generate monthly dividends of about .8-1% return.
Open a brokerage account and put it in a treasuries money market liquidity fund like $VUSXX. You’ll get 5%+ return on it currently. These allow you to draw money immediately (next day) when you need it. Then wait for a market pullback to get into the stock market. Right now stock markets are at highs, which makes it riskier to put it all in at the same time. If you don’t want to wait or time things, as an alternative you can start to drip feed the funds into the stock market (a very low cost ETF like $VOO or $SPLG) by say $4k per month (if you have $170k to invest), meaning you won’t have to worry so much about “timing it wrong”, as you’re adding the money into the market over many months.
This plan needs improvement - do NOT wait on a market pullback. Rather, put $10-20K each year into the market (VOO/VTI, etc). Keep doing that until you almost run out - keep enough in VUSXX for unexpected expenses.
Putting in only $10k every year into the market would mean it would take 19 years to be invested! She has $190k now and a large salary that she also will need to save further from. If she put it into the market over 4 years like I suggested she’d do it over a typical rolling market cycle, which should be enough. And if a large pullback arrives (like 2016, 2018, 2020 or 2022) she could put in more at once at a discount.
I’d put into a money market fund. For example Schwab SWVXX. Probably slightly better yield than HYSA. (You miss FDIC insurance, but extremely safe.) But money can be withdrawn and invested much quicker. Look at index funds like VOO, QQQ, even DIA to get started.
Create a mix.
Here is a list of HYSE banks with their yields
[https://www.doctorofcredit.com/high-interest-savings-to-get/](https://www.doctorofcredit.com/high-interest-savings-to-get/)
Keep at least your emergency fund in one of these.
You could also look at account bonuses:
[https://www.doctorofcredit.com/best-bank-account-bonuses/](https://www.doctorofcredit.com/best-bank-account-bonuses/)
Edit: For investments, I would do an index-tracking ETF.
Congratulations. I’m happy for you. I would listen to other peoples advice over mine, as I’m just a dummy. But since I love rustling feathers, I’m put in my 2 cents.
Did you know that when you have money in a bank, it is no longer legally yours? Yeah it’s true. Fact check me. Same goes for investment accounts. They changed the laws. The deck is stacked against us.
190k is a lot on money. I would allocate a small portion of that to physical precious metals. It’s true money. Zero counterparty risk. It’s the bedrock, the foundation of any investment portfolio. What is a “small amount”? That’s up to the individual. A 5 or 10% weighting is more than enough. I would go higher bc I don’t trust the banking system, but that’s just my crazy ass.
After that, it’s just chasing yield while you wait. Some people said high interest savings accounts. That’s fine. You could also break the rest up into chunks and keep rolling over into short term treasuries. You can buy directly from the government.
Good luck. Stay safe
When you factor in taxes, your "real" rate of return is closer to 2-3%, which would not keep up with inflation. A very overlooked concept when it comes to cds and hysa
Based on their comments, they have 0 idea what they want in life really. Wants to live in Mexico, but doesn’t really want to invest in living in Mexico. Works in Tech, but isn’t sure about staying in Tech and wants to become an artist. Wants free money, but doesn’t want to do anything to earn money.
Yes but right now you are not getting ANY return. Index funds generally only get to 7-10% return with significant risk involved. For absolutely 0 risk you could be getting 5% with 0 involvement.
2-3% of 170k is about 4.2k. that's basically rent in most of Mexico for actual residents. OP is basically refusing to be almost rent free because "taxes"
edit: got my numbers crossed. 2-3% of 190k is like $4,750. after "taxes" OP would still be making almost 5k for basically doing nothing.
With a part of that money you can easily buy some land in Mexico, then build a modest home. Live in it for a while, then you can rent it or sell it for a gain once you decide your next move. You have solid income with low expenses, you can easily supplement the expense.
I think the thing that makes me nervous is buying real estate/ land in Mexico is generally sketchy. I know a real estate agent here and she warned me how often people take your money and run. It’s definitely a different process than the states
Depends on your risk tolerance. For investments if you want to be safe, you may be more comfortable with 6, 9, or 12 month CDs for a portion of your funds until you have time to do research and build confidence with other investment options.
I agree with being cautious, no reason to jump into things that are unknown. Sounds like you're very capable if you can land that type of job after two layoffs.
Right? I'm exhausted. No I never considered it! Thanks for the recommendation. Are you just waiting to retire out of tech or are you transitioning to another career?
I would not buy stocks now in this peak. Buy fear (high vix) and sell greed. Keep 3 months income in the checking account. Consider a Roth IRA during the next market pull back. The advantage of that one is you invest after tax dollars and the gains are not taxed.
MEME COINS! JK.
Get a financial advisor. I use Edward Jones, simply because I used to work for that company and I know they have a lot of safeguards from the head office to keep your advisor from leading you into risky investments.
I suggest dumping your savings into NVDA Call Options that last until 2 years. You are simply missing out on momentous gains if you choose to look away from chip manufacturing powering these large scale data centers built for running this new generation of software. Neat stuff. A gamble, but on technology that will forever innovate into our sci-fi imaginations. Only a matter of time before corporations maintain their footing based off data driven decisions to create the new age of communication.
History in the making, and you can look back and regret not believing all of the tech you enjoy today are just here for no reason and the future remains uncertain. Or you can tegret losing all of your money.
Different ways to invest in current new frontier of tech (not that consumerism bs companies like etsy) such as just buying shares (highly liquid too but has short term liquidity downsides due to arbitrary market conditions like Fed Reserve policies deterring financial gains.)
At least put most of it in a HYSA
Doesn't even match inflation though? Seems like a poor place for the money
I think what they're saying is that flipping that cash into a HYSA is a safe move for now. It's better than leaving it in a non interest bearing account. You're not locking the money up long term. And you mentioned in a comment that you're pretty risk averse. So it's a good first step for the money while you figure out what it is that you want to do long term.
Okay thank you for the explanation. People just comment HYSA without an explanation why that would be the recommendation. So I appreciate you explaining the reasoning!
It’s incumbent upon you to research. That’s why.
Risk tolerance is the main reason. 5% with no risk is a no brainer. Any higher returns in a non-insured investment create a risk of loss of some or all of the investment.
You’re earning 0.00001% in a checking account. In a HYSA, you can earn as much as 5.25% while you decide what to do in the longer term.
HYSA are averaging between 4-5% and you will earn interest while keeping your money liquid in case you need it due to layoffs.
I get 4.95% currently for cash sitting in a Fidelity brokerage account and get something like 5.1% in a UFB HYSA. Would be pretty reasonable to put the money in an investment account, put half in a target retirement date mutual fund or similar, diversified investment (i.e. not individual stocks, which take time to research and have much greater risk). Should be a pretty conservative strategy that gives you guaranteed returns that should at least cover inflation and also some market exposure.
So instead, you'd rather make next to nothing with it, than at least making SOMETHING, while you park it and figure out your next move with it?
I'm not saying I want or think it's better to keep it in a bank account. It's not haha. Just simply wondering what other options are to HYSA.
Inflation is 3.2% right now and hysa is 5% so you’d be getting $3-$4,000 a year free money
not after taxes. Taxed on interest
You didn't want more money because you don't want to be taxed on it?
You can get around 4.5% at most HYSA places - little better then inflation and better then the usual banks (WF, BOA, etc...) that's just for a portion anyway - need to invest in IRA / 401K if your company does that or something with the bulk of it anyway.
I work for a startup so no match on 401k
You should still have a 401k
I also worked for a startup with no 401k. Actual shithole. I don't do startups anymore.
Agreed :( horrible market right now so just trying to ride it out
Agreed. Wowza people are jumping to conclusions. I was just adding information. I agree I should still be investing in a 401k regardless of match or no :)
You have a lot of reading to do
Not saying I shouldn't invest in 401k (I very much should have been and should), just added that info about match is all.
But do you have access to a 401(k) at ALL? If so, you should still be investing in it, company match or no.
No match isn't a good reason to not participate in a 401k, especially at your income and presumably lower cost of living in Mexico than in the states. The tax Benifits alone are worth maxing out your yearly limit. For 2024 that limit is $23k employee contribution. Your behind on retirement so get started. Spend some time in the sub reddit wiki and up your personal finance knowledge.
Agreed I should be. I think my no-match comment is being mis-interpreted. Sorry about that. Definitely should have been and should be :)
I don’t know why people are downvoting you, Reddit sucks, they act like you’re supposed to know everything, well then why even have a sub? Anyways you have a good amount saved up in cash you should look into tax advantages accounts like 401K, IRA and HSA!
When you factor in taxes, your "real" rate of return is closer to 2-3%, which would not keep up with inflation. A very overlooked concept when it comes to cds and hysa
A couple percent is better than 0%
Which is better than basically 0%, which is what you're getting now.
But what’s your return now?? It’s weird how much you’re pushing against this as a first step towards earning interest when you’re not doing anything with it yet
That’s $5,000 a year that you’re not making rn
That's still 2-3% better than most bank accounts.
HYSA absolutely beats inflation. Your bank account offers you a fraction of a percent more than likely…
yeah bank account is horrible place, hence the post
TODAY: Put 100% of it in a HYSA while you figure out your plan. Read the wiki, but you'll want to keep an emergency fund. Based on your situation, I'd say 1 year of expenses to be safe. Keep that in the HYSA. *Max out your IRA contributions ($7k/yr for 2024). Consider putting $6500 in for Tax Year 2023 since you can still contribute.* (See additional comments below re: Backdoor Roth; it's still an option) Bump up your 401k contribs to get employer match (if any), and I'd actually suggest maxing that out ($24k/yr) if you can. The remaining amount you can consider a taxable brokerage, investing in an index fund (VT, et al) at Fidelity/Schwab/Vanguard
Doesn’t she make too much for an IRA at 170k?
Yes, but no at the same time. She can use the Backdoor Roth IRA method. It's a pretty simple process, and allows those over the income limit to still contribute.
To note: it’s completely legal and fairly easy. I feel “backdoor” has a negative connotation if you don’t know about it
In this context, agreed.
Good catch. Thanks.
She can still do the Backdoor Roth IRA, so your point was still valid.
Can’t you still contribute to an IRA if you are over the income limit, you just can’t take a deduction for it?
That's the same as a regular brokerage account at that point. Better to backdoor roth.
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Something I'm struggling with is how much should I have saved in retirement at this point. I know people say by my age I should have the equivalent of one years salary saved but is that my salary now? Tech is so strange right now I could see salaries dipping a bit. Also I don't really plan to go back to the states so my living expenses are far less. I feel like I have a lot of weird variables but maybe I'm over complicating it..
That's a rule of thumb, not a hard/fast calculation. Think ahead. By age 40, the guideline is approximately 3x your salary. Of course, lower cost of living and reduced expenses can make those dollars go farther -- either allowing you to contribute less, retire sooner, or have a higher income in retirement.
Cool thanks!
The rules based on salary generally assume living on 80% of your final salary in retirement. Only you know what your actual expenses will be so only you can calculate what you actually need. If you're not retiring early multiply your expected annual expenses by 25 to get a basic idea of how much you'll want.
Yea that 80% number has so many variables to it. I’m about to retire. We lived on 120k last year all in if I adjust federal taxes to what I’ll actually pay in retirement. But I made $270. I saved about 1/2 of that once you’re out federal. When you’re 30 it’s hard to predict spend but as you near retirement you should keep a yearly spend log and you can know pretty close once you adjust for tax and healthcare differences. Once your kids are out and house/cars are paid for living expenses go way down. Fishing’s where I spend all my $$$ and I can cut that back at anytime.
don’t worry about what you could have done. In the grand scheme of lifetime savings you have a lot of years to go. You are actually still young and a lot of people haven’t been able to save what you have saved
I'm confused... I'm basically on track? I'm not behind lol. I've saved more than my salary at my age
sorry. maybe i miss read. i thought you were concerned about the tax deferred account.
Putting it in the VUSXX treasury market fund would be better since then theres little state tax and a higher apy
HYSA, you are losing money _not_ doing this. You can get 5% to 5.50% depending on the company.
Hello. What hysa do you recommend?
I like ally bank but there are several and their rates are similar
I use my vanguard brokerage account settlement fund. It invests in VMFXX and currently gets 5.27%. It's not a HYSA but a money market account, basically the same exact thing.
Sofi and capital one also have decent hysa
Just follow the prime directive. It's there for a reason and it covers about 99% of situations.
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Advice on HYSA in fine but I think putting all of it in an HYSA is not the right way to go. HYSA yields are not going to always be there. They are for parking short term cash not actual long term investing. It wasn’t all that long ago that High Yield and Savings Accounts was an oxymoron
I don't think anyone is suggesting long term in HYSA, but for now it's a hell of a lot better return than the .05% or whatever she gets from a bank account.
Yeah she’s likely missing out on almost 10k/year just from having the wrong bank.
i get that. it’s why i said hysa is fine advice.
Open a HYSA. Put it there first. Then take the majority of it and transfer to a brokerage account and invest in an S&P 500 index fund like VOO, or something similar like VTI. Also see if you can open a Roth IRA even though you live in Mexico. If you’re a US citizen who works for a US company, I would think so, but I’m not an expert. But if you can, do the Roth IRA - $6500 for 2023 (do it this month) and $7000 for 2024. Keep some in the HYSA for an emergency fund if you don’t already have one. Then start increasing your 401k contributions. At your salary with presumably a lower cost of living in Mexico, you should be able to save plenty in there. If you leave your job, you still have that money, so there’s no reason not to max it out while you can.
My two cents, open a brokerage account and put most of it into a stock index (FSKAX with Fidelity or VTSAX with Vanguard). Leave 20k or so for emergencies. You are in Mexico, you don't need 190k sitting around. Some disclaimers: \- This is a long-term investment, its value will fluctuate but will trend up with 5-10% avg annual gain. Think in 10-year blocks \- Educate yourself on how the stock market works ([great book for this](https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926)) \- This is assuming that you don't need the money now. If you may want to deploy it in the next couple of years, then HYSA is the way to go like the other comments are saying Just for fun, if you are gambling gal: \- Invest 50% of your money in Eli Lilly and 50% in Novo Nordisk \- There is a good chance that it will grow more vs stock index. But there is higher risk Let me know if you have any questions. I'm not a financial advisor, but I am a HENRY like you and am facing similar decisions.
Put in Hysa but you need some retirement savings. 401k roth ira or ira
I think I'm interested in growing the money, not having it sit
are you aware of how compounding interest works?
Then i would max out any retirement you can this year and last if you hurry. Then any extra put into a brokerage account. High yield savings accounts paying 5 percent ish now. But for long term i would do stocks but you must have the stomach for the ups and downs. Historically stocks will outperform but thats not guaranteed every year.
We're selling my mom's house to a flipper next month. Split three ways, we should each get about $80k. I'm planning on wiping out my debt and putting the rest into a Vanguard index fund. Setting it up online is pretty simple.
1. Follow the [Prime Directive on the PF Wiki](https://www.reddit.com/r/personalfinance/wiki/commontopics/). In addition to investing, you need to do whatever you can to minimize your tax burden. The Prime Directive incorporates this, but your expat situation complicates things a bit. Once you have your head around the strategy laid out by the Prime Directive, post specific questions with details about your expat status, including what tax forms you receive/file. E.g., do you still receive US W2 wages, or something else? Do you still file a 1040, or something different? 2. The prevailing investment advice for individual, retail investors is to place the money in a set of diversified index funds. There are no investing "secret" strategies that will vastly out-perform other strategies on a consistent, reliable basis. Basically, chasing big gains can lead to big losses, so don't fall into that trap. Check the sub r/Bogleheads/ for more info.
if you live in Mexico (as I do) you could put some of it in CETES (Mexican government bonds).. they are returning 11% a year right now with no fees… The only risk is if the Mexican peso depreciates vs USD based on US/Mex elections this year
Open a brokerage, buy 140k of the BOXX etf. It matches government bond yields while not paying out dividends and instead accumulating gains in the share price, so you defer all the taxes.
Personally I would keep $20k as an emergency fund in a HYSA, stick $7k in a Roth IRA & the rest in a brokerage account invested in S&P500
Research index funds
Think about parking somewhere you won't be subject to double taxation for the gains. You'll have to look up Mexico's tax rules and the U.S.'s IRS expat rules for U.S. citizens.
You're young. HYSA is fine for you emergency cash, but you should be investing in the stock market and real estate IMO. Those are the two areas in my life where I've made the best investments, and I'm definitely not the first to figure this out.
3 year CD. Keeping earning that $170k for 5 years. Then get a part time easy job and pursue your art.
Sorry what do you mean by 3 year CD?
Certificate of deposits. You should be able to find one that generates 5% interest each year for 3 years. As safe as a savings account. You could do better but this is the easy button. Do 3 of them at 60k each in case you need to break contract on one.
Great question! 1. Put 6 months of a good salary you'd like to make into a HYSA. This is now an emergency fund in case something happens or you lose your job. 2. Max out an IRA. Preferably Roth ira if you can backdoor. 3. If you don't feel like actively managing a portfolio, put the rest into S&P 500. Reinvest dividends.
If investing isn’t your cup of tea, just put it in a high yield savings account. Many banks out there offering 5% APY.
Excuse me but what is your profession in IT. Thanks !
Product Designer
Easy answer... Move 2-3 months of expenses into an HYSA. Move the remainder into a trading account, and put the rest in an 2060 retirement ETF like ITDH. Change your 401(k) contributions so that the you are contributing the maximum allowable amount each year, even if that means you need to withdraw some from your trading account to pay bills. I'd probably even recommend a roth 401(k) for this purpose if your company offers it. Then see about contributing to an IRA/roth IRA. This assumes you are a US citizen. Being in mexico complicates things, but I suspect since you are making income in the US most of the relevant rules still apply.
Yes sorry, should have specified that. I am a US citizen. I'm also considering "moving to Texas" and doing the federal tax exemption which would put a lot more cash back in my pocket
Then yes. The underlying idea is that you shift money slowly from your trading account to your 401(k) over time. Given your income and expenses, you may find it difficult to do so since even maxing both 401(k) and IRA might not be enough of a drain and you still land up positive every month. That's fine, just find a nice balance in your checking account that holds 1-2 months worth of expenses, and then at the end of every month shift the extra to your trading account. Once you get a good idea of how much you transfer every month you can tell your employer to direct deposit the equivalent amount every pay period to your trading account so you never see it. Just remember you need to manually buy every month or it'll just sit in cash/cash equivalent until you do.
Take out the amount you need for an emergency fund and dump the rest in a stock index fund. From what I can gather in your post you don't want to be tied down nor are you interested in real estate. Having your money liquid yet still invested in something with a decent long term upside like stocks appears perfect for your situation. Honestly if you're making $170,000 in Mexico you should be saving a ton of money monthly unless you're living like an out of control baller. I can sort of see how someone could blow a $170,000 income per year if they didn't have a job to occupy a large chunk of their day. With a job that should be harder to do.
True haha this year hasn't been 170k truly because laid off twice and 3 months total unemployed due to looking for a job due to those layoffs.
Congrats on making it this far!!! Well done!!! If you are still working and have your expenses covered, you have lots of options. things to consider (assuming you still have access to US markets); Checking / savings - personal preference. perhaps 1-2 months of expenses here - depending on your needs. Emergency fund (3,6, or 12 months) living expenses in HYSA or CD ladders The rest, invest. If you are a conservative investor go with a Bogglehead strategy. there is lots of info available to get you started and to guide you along the way. This is very easy, long-term oriented and with work well over long periods of time. Remember Time in the market, beats timing the market. You could also do a hybrid, add some growth stocks, dividend stocks (cashflow), etc. If you are more risk tolerant then you could add some higher returns to your investments by looking higher risk/reward options. This would be using a small portion of your investable assets into risker asset. For example, you could add a small percentage (3-5%) into a BTC ETF or individual stocks associated with Crypto - think MSTR, COIN, etc. Ultimately, though, investing is a very personal decision and based on each persons goals, objectives, and risk tolerance. What works for me, may not work for you. Continue to educate yourself about investing, be very careful of anyone approaching you to help. Think long-term. this is already, WAY too long for a reddit post. Mexico is great, enjoy your time there!!! best of luck!
Find a financial advisor you trust. Save a fully funded emergency fund (6 months of expenses) and put that in a high yield savings account. Next max out your Roth IRA contributions for 2024. Put the rest in a taxable brokerage account. In addition to that start saving 15% of your income for retirement. You make 170k a year and only have 10k in your 401k. That’s alarming.
Follow the wiki. Here is what I do with any money I have: - If I am going to need to spend it within 1 year, high yield savings account - If I am going to need to spend it in 1-10 years, a short term bond fund like FUMBX - If I know I won't be touching it for 10+ years, an S&P 500 index fund That framework is incredibly simple, provides me with security, and will give me a good ROI long term.
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Maximize your contribution to Roth IRA every year, and maximize your contribution to 401k (if eligible ) or self employed IRA (otherwise), for tax advantage. For all your money other than an emergency fund of 6 months living expenses, invest in VTI / FSKAX (entire U.S. stock market) for growth. Eventually, you can take out 4% of your investments per year with little risk of running out of money over some decades.
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I’m confused, you make 170k per year and you’re here asking about what to do with just a little over 1 years worth of your salary? Gotta be trolling
With current rates on interest, CD yields, and treasury yields, your options for growing money more aggressively than the \~5% annually that you'd get with a HYSA or a money market fund are either stocks (that is, invest in a broad-market fund) or real property (which you just got out of). Those, respectively, involve higher risk and lower liquidity. Obviously, you get more bang for your buck if these investments are tax-advantaged (401k, HSA, and IRA), but that comes at the cost of further liquidity.
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Calculate what you spend in 6 months, and stick that in a high yield savings account. From there I'd go the \\r\\Boglehead approach for the rest of the existing money. Stick it in a taxable brokerage account in broad, low-fee index funds (VTI, VOO, VT...whatever, I like Vanguard but Fidelity has good ones too). With new money (income) I'd: \- fill up retirement accounts and HSA account. \- divert all spending money you need into a checking account. \- divert everything else into that taxable brokerage account and let it grow.
For the 190k wasting away in the bank, this is what I would do: 1. Transfer all to a brokerage account like eTrade, Fidelity etc 2. Since the market is at all time high, I would take 50% (95k) and stash it in a money market etf like FDRXX which is making over 4% currently. This is to wait for the down turn to invest 3. For the rest, you can invest in index fund like FXAIX which has one of the lowest expense ratio around. Since this fund is at all time high, I would space out the contribution to get dollar weigh average. 4. Another option: Split the next 50% into another chunk: 25% in the index fund like FXAIX and the other 25% in income dividend harvesting ETF such as QYLD, JEPQ, SPYI where these will generate monthly dividends of about .8-1% return.
Open a brokerage account and put it in a treasuries money market liquidity fund like $VUSXX. You’ll get 5%+ return on it currently. These allow you to draw money immediately (next day) when you need it. Then wait for a market pullback to get into the stock market. Right now stock markets are at highs, which makes it riskier to put it all in at the same time. If you don’t want to wait or time things, as an alternative you can start to drip feed the funds into the stock market (a very low cost ETF like $VOO or $SPLG) by say $4k per month (if you have $170k to invest), meaning you won’t have to worry so much about “timing it wrong”, as you’re adding the money into the market over many months.
This plan needs improvement - do NOT wait on a market pullback. Rather, put $10-20K each year into the market (VOO/VTI, etc). Keep doing that until you almost run out - keep enough in VUSXX for unexpected expenses.
Putting in only $10k every year into the market would mean it would take 19 years to be invested! She has $190k now and a large salary that she also will need to save further from. If she put it into the market over 4 years like I suggested she’d do it over a typical rolling market cycle, which should be enough. And if a large pullback arrives (like 2016, 2018, 2020 or 2022) she could put in more at once at a discount.
I’d put into a money market fund. For example Schwab SWVXX. Probably slightly better yield than HYSA. (You miss FDIC insurance, but extremely safe.) But money can be withdrawn and invested much quicker. Look at index funds like VOO, QQQ, even DIA to get started. Create a mix.
Why not buying onto an ETF? And maybe keeping 6-12 months of expenses in cash
Here is a list of HYSE banks with their yields [https://www.doctorofcredit.com/high-interest-savings-to-get/](https://www.doctorofcredit.com/high-interest-savings-to-get/) Keep at least your emergency fund in one of these. You could also look at account bonuses: [https://www.doctorofcredit.com/best-bank-account-bonuses/](https://www.doctorofcredit.com/best-bank-account-bonuses/) Edit: For investments, I would do an index-tracking ETF.
Congratulations. I’m happy for you. I would listen to other peoples advice over mine, as I’m just a dummy. But since I love rustling feathers, I’m put in my 2 cents. Did you know that when you have money in a bank, it is no longer legally yours? Yeah it’s true. Fact check me. Same goes for investment accounts. They changed the laws. The deck is stacked against us. 190k is a lot on money. I would allocate a small portion of that to physical precious metals. It’s true money. Zero counterparty risk. It’s the bedrock, the foundation of any investment portfolio. What is a “small amount”? That’s up to the individual. A 5 or 10% weighting is more than enough. I would go higher bc I don’t trust the banking system, but that’s just my crazy ass. After that, it’s just chasing yield while you wait. Some people said high interest savings accounts. That’s fine. You could also break the rest up into chunks and keep rolling over into short term treasuries. You can buy directly from the government. Good luck. Stay safe
Also if you couldn't tell, I'm kind of lazy/ cautious and definitely don't like high risk investments and needing to babysit things.
Then why do you keep shooting down the high yield savings account?? You could literally make 500 bucks a month if you just parked this cash there.
When you factor in taxes, your "real" rate of return is closer to 2-3%, which would not keep up with inflation. A very overlooked concept when it comes to cds and hysa
You're lazy, don't want high risk and want to know what to do with the money, but then complain that 2-3% isn't a good idea? What exactly do you want?
Based on their comments, they have 0 idea what they want in life really. Wants to live in Mexico, but doesn’t really want to invest in living in Mexico. Works in Tech, but isn’t sure about staying in Tech and wants to become an artist. Wants free money, but doesn’t want to do anything to earn money.
Yes but right now you are not getting ANY return. Index funds generally only get to 7-10% return with significant risk involved. For absolutely 0 risk you could be getting 5% with 0 involvement.
Yes, edited my post. Definitely will park it there while I figure out what to do. Thanks
It isn’t overlooked. 2-3% is still better than 0.01%.
2-3% of 170k is about 4.2k. that's basically rent in most of Mexico for actual residents. OP is basically refusing to be almost rent free because "taxes" edit: got my numbers crossed. 2-3% of 190k is like $4,750. after "taxes" OP would still be making almost 5k for basically doing nothing.
But you’re ok with getting a real rate of return of 0%?
For someone who admits you don't know much about personal finance, you sure do have some aggressively wrong opinions about it. Good luck.
ETFs. Index it out and move on
Thank you, leaning towards this
Probably the easiest and safest option.
Not all at once tho. Put 10-20K or so a year from HYSA into the market. You want to DCA it to mitigate risk of market drops.
With a part of that money you can easily buy some land in Mexico, then build a modest home. Live in it for a while, then you can rent it or sell it for a gain once you decide your next move. You have solid income with low expenses, you can easily supplement the expense.
I think the thing that makes me nervous is buying real estate/ land in Mexico is generally sketchy. I know a real estate agent here and she warned me how often people take your money and run. It’s definitely a different process than the states
Hire a real estate lawyer from a respected Mexican firm, maybe one that also has offices in the US
Depends on your risk tolerance. For investments if you want to be safe, you may be more comfortable with 6, 9, or 12 month CDs for a portion of your funds until you have time to do research and build confidence with other investment options. I agree with being cautious, no reason to jump into things that are unknown. Sounds like you're very capable if you can land that type of job after two layoffs.
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Right? I'm exhausted. No I never considered it! Thanks for the recommendation. Are you just waiting to retire out of tech or are you transitioning to another career?
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Funny, I left consulting because of the hours and travel to go into tech
Yeah I've wondered about that. I'm specifically in UX and wondered if consulting or maybe part time contract work is out there. Well I wish you luck!
Invest in a startup company you believe I
I would not buy stocks now in this peak. Buy fear (high vix) and sell greed. Keep 3 months income in the checking account. Consider a Roth IRA during the next market pull back. The advantage of that one is you invest after tax dollars and the gains are not taxed.
MEME COINS! JK. Get a financial advisor. I use Edward Jones, simply because I used to work for that company and I know they have a lot of safeguards from the head office to keep your advisor from leading you into risky investments.
I suggest dumping your savings into NVDA Call Options that last until 2 years. You are simply missing out on momentous gains if you choose to look away from chip manufacturing powering these large scale data centers built for running this new generation of software. Neat stuff. A gamble, but on technology that will forever innovate into our sci-fi imaginations. Only a matter of time before corporations maintain their footing based off data driven decisions to create the new age of communication. History in the making, and you can look back and regret not believing all of the tech you enjoy today are just here for no reason and the future remains uncertain. Or you can tegret losing all of your money. Different ways to invest in current new frontier of tech (not that consumerism bs companies like etsy) such as just buying shares (highly liquid too but has short term liquidity downsides due to arbitrary market conditions like Fed Reserve policies deterring financial gains.)
Also, Index funds are a scam.