What would you do with this $?

[BRMtnLvr]

About to be selling our rental property and will not be investing in another one at this time. We will have $125k at the end of this month. If you were married, 33 with their first kid on the way, already maxing out your Roth’s and work 401ks where would you put this money? We already have an emergency fund and no debt besides two mortgages (primary home and vacation home we rent STR.

 

[aja8888]

About to be selling our rental property and will not be investing in another one at this time. We will have $125k at the end of this month. If you were married, 33 with their first kid on the way, already maxing out your Roth’s and work 401ks where would you put this money? We already have an emergency fund and no debt besides two mortgages (primary home and vacation home we rent STR.

I would say buy a new Corvette, but with a baby on the way, I would put it in a savings account like Ally has that pays 0.5% for the time being. You may need some of the money for other things and maybe want to start a 529 college savings plan for the new kid.

You will have plenty of time to figure out how to invest or use that money after the child is born and everything is back to normal.

 

[Jerry1]

I was thinking along the same lines. A 529 plan would be something I’d consider.

 

[OldShooter]

It's just money, same as the Roths and 401ks. Unless it has some special short-term destiny, it is simply part of your portfolio and should be invested consistent with your written or mental investment policy statement. 529s for present and future kids probably makes sense, but you have to look at your overall picture in order to decide.

 

[MissMolly]

Why not put part of it in I-Bonds? They can be withdrawn tax-free if used for educational purposes. And they pay way better than an Ally account. The $20,000 you invest this year is going to be a nice chunk for when your child is ready to start college. And all tax-free.

 

[swaneesr]

Well this is just me.

I am so boring I would throw the whole thing in Vanguard VTSAX and ignore it for a few years.

Swanee

 

[38Chevy454]

I assume the $125K is net after taxes? If not, be sure to put the needed money aside for Uncle Sam. With the rest I like putting some into 529. For the remaining, I would do some 401k conversion to Roth, using the after tax money from the rental to pay the tax on the conversion. Any leftover, if longer term investment just put into the market. I would just use a low fee total market fund. It may have some short term volatility, but over long term it will work out better than fixed income side investments.
The compounding potential of the Roth conversions at your age is tremendous opportunity.

 

[pb4uski]

Why not put part of it in I-Bonds? They can be withdrawn tax-free if used for educational purposes. And they pay way better than an Ally account. The $20,000 you invest this year is going to be a nice chunk for when your child is ready to start college. And all tax-free.

+1 and you could also do $20k in EE bonds... while the yield sucks if you hold them for 20 years then they are guaranteed to double, which is a 3.53% guaranteed annual return for 20 years.... something to be considered for long-term money.

 

[RobbieB]

One third in equities, one third in I bonds and one third in "baby stuff"

 

[NW-Bound]

One third in equities, one third in I bonds and one third in "baby stuff"

Not even 1/100 in Wagyu beef, caviar, and champagne?

 

[RobbieB]

With a baby coming?

 

[NW-Bound]

You mean more than 1/100 to allow for the baby to partake?

I don't think a baby eats much.

 

[RobbieB]

I dunno, but I've been told babies are really expensive. Boats pale in comparison.

And you can always get rid of the boat eh?

 

[NW-Bound]

It's been a while (my kids are in their 30s), so I don't remember exactly. But I remember that little babies are not as expensive as college-age children.

Might as well get some of the Wagyu beef while you can still afford it.

 

[RobbieB]

Probably true. No bio kids of my own. I dunno.

I do know that I paid the bill for my stepson to graduate MIT after his bio dad told him "I'm not paying for you anymore get a loan"

And a full ride for my step daughter at UCLA.

The first cost twice as much as the boat I own now. The DSD is still in undergrad.

 

[kgtest]

I have 3 kids, this is our playbook.

12,000.00 Max Roth's First of the year
41,000.00 Max both 401ks
40,500.00 Max After Tax Solo Roth 401k
7,200.00 Max HSA
A little into broker account
Anything else goes into 3 kids 529s. Usually a couple thousand for each kid each year.

Comes out to about ~$110,000 towards investing after paying tax on Roth after-tax, but getting the income reduction with 401ks, HSA and a $250 state tax credit for the 529. We get about $5000 in cash back rewards every year that helps fuel this rocket ship. Wife gets a 5% match on her 401k so some more free money there as well. Saving is FUN!

 

[kgtest]

Probably true. No bio kids of my own. I dunno.

I do know that I paid the bill for my stepson to graduate MIT after his bio dad told him "I'm not paying for you anymore get a loan"

And a full ride for my step daughter at UCLA.

The first cost twice as much as the boat I own now. The DSD is still in undergrad.

You will be well cared for when you are older DSS and DSD are gonna be bringing you gold bricks to your CCRC penthouse. Or hopefully a nice birthday gift and whatever brings you joy! BTD !

 

[RobbieB]

One can only hope.

 

[jollystomper]

About to be selling our rental property and will not be investing in another one at this time. We will have $125k at the end of this month. If you were married, 33 with their first kid on the way, already maxing out your Roth’s and work 401ks where would you put this money? We already have an emergency fund and no debt besides two mortgages (primary home and vacation home we rent STR.

I would go have fun with 10-20% of it, and then invest the rest in a broad market index fund. Maybe half of it in a taxable fund, the other half in a 529 for your child (congrats!), if you are so inclined. At 33 you have lots of runways for long term growth.

 

[Koolau]

No idea how you are currently invested. Some good ideas so far (I like the I-bonds idea - especially right now.) Otherwise, I'd say add to your current Asset Allocation in the same ratio (if your AA is as you desire for the next year or so.) Don't forget, YMMV so make your own decisions and remember what you paid us for the advice.

 

[mrfeh]

It's just money, same as the Roths and 401ks. Unless it has some special short-term destiny, it is simply part of your portfolio and should be invested consistent with your written or mental investment policy statement. 529s for present and future kids probably makes sense, but you have to look at your overall picture in order to decide.

+1

If the money isn't needed soon, open a brokerage account and invest.

 

[finnski1]

One third in equities, one third in I bonds and one third in "baby stuff"

That actually sounds pretty good to me. Maybe the "baby stuff" could be 1/2 529's and half stuff.

 

[Dash man]

If you plan on retiring early, it’s best to have a taxable brokerage account to withdraw money from. Put some of it in a low cost growth ETF or total market ETF.
Putting some in a 529 plan is also wise.