Regarding my original question... let me re-phrase it slightly: based on the numbers and conditions I described in my very first post, what would you guys do if you were in my shoes? Would you continue saving at our current rate to increase our cash/liquid funds? Would you save less cash and invest more? Would you withdraw and invest some of the money from our emergency fund? If so, where would you invest? How much? Again, any ideas or comments are welcomed. Thanks again!
When your spouse is starting a pregnancy, it's always good to be there...
I was the same way when DW and I just started off. I wanted to save as much money as possible and didn't want kids because they would delay our "progress". Finally, when she was 30, she had enough and talked me into one kid, then a few years later, another. Now I can't imagine life WITHOUT kids.
Hopefully by the time we both reach 34-36 we'll have crossed our first milestone/goal: $100K in cash savings, with around 20K in investments (it's doable, at our current savings rate, and we are working diligently to achieve it). We'll see where we stand there as far as children go.
Thank you, Owasso, for your reply. Every day I am more and more aware of the realities of what you just described. Back in 2001, right after I moved from Argentina to the US, my home-country experienced what was called "El Corralito", or "The Little Locker". The translation doesn't do it any justice, though. Basically, inflation was running (once again) so rampant, that the government confiscated all bank accounts and deposits for a a few months (in some cases a few years, depending on your investment and account types), only allowing you to withdraw a certain amount every month. By the time one was able to FULLY withdraw what was rightfully YOURS, the currency was so devalued that what little you had was now, in fact, worth even less. To make matters worse, if you were prudent enough to keep your savings in US dollars (very common back then in Argentina), the government would automatically give you the equivalent in Argentinian Pesos based on the then CURRENT exchange rate. In other words, if you, for example, had US 10K, and you were finally able to take that out of the bank, you would now have 10K in ARGENTINIAN currency, which was worth about THREE TIMES LESS.
I am educating myself when it comes to investments, the stock market, etc. My only experience so far, as stated in my original post, is a 1K investment in a mutual fund (Dreyfus GNMA Class C, to be exact, recommended by a broker... but I don't like the expense ratio of this fund now that I understand these things a little better) that's currently returning about 4%. I would love to hear any feedback about this or any other potential fund that might be appropriate for me, based on what we have discussed here.
My goal is to reach a few numbers when it comes to my CASH savings that, for whatever psychological reason, will simply give me some peace of mind. These are: $60K in my "retirement" account (a money market account, actually), and $25K in my "cash emergency fund" (a regular savings account). At our current savings rate of around 3K per month (if neither of us looses our jobs... knock on wood!) we should be there in as little as 2 to 3 months. Once those numbers are in place, I am thinking of hitting the brakes on the hard-cash savings and switching my energies into opening a portfolio with around 3K (a month's worth of savings), just to test the waters, and take it from there.
My plan is to start with a handful of quality stocks, adding also money to the mutual fund I currently have. My bank (Bank Of America) is currently offering no-fees trades for stocks and ETF's now that they have merged with Merryll Lynch, so I am thinking of opening an investment account there in order to save some $$$ in fees and to have the ability to view all my accounts in one single website (and move money around the investment and traditional accounts).
What do you think?
Additionally, we are saving for a vacation for our 1-year anniversary that will end up probably costing around 5K, so every penny counts when it comes to our incomes and maximizing our cash retirement and emergency fund savings. Also, unlike hers, my own job security gets weaker by the second, so that was another factor to maximize her take-home pay. My goal is to increase her contribution amount to around $250 a month for 2011... if I don't loose my job, that is.
Agreed. But the answer is simple: we have not had a honeymoon yet, and the vacation/honeymoon plan is to travel to my home country, which I haven't visited in 3 years. That number includes $2500 worth of tickets, and the rest is just a worst-case scenario guess. Knowing me, it might end up costing us 3K total. We currently live on one income alone and save the rest. I feel that worse-come-to-worse, if I loose my job we could still continue to pay our bills with my wife's salary while I look for another job, and we also have our emergency fund in place as a last resort.
Besides, what's the point of all of this if I can not even enjoy a honeymoon with my wife in my own country and visit my family at the same time, whom I deeply miss?
I feel comfortable with that amount as far as having enough cash in hand in case of an emergency, a mayor purchase (such as a car), and as a "general" retirement cash savings account, and from now on I will start re-directing all our future savings towards investments, using some of the advice I received from you guys.