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First, congrats on an extra unmarked $3k/m, $36k/yr.
But, between your first post and this one even, no enough info to go on.
Do you own a house? Paid for or mortgage? (To some people "no debt" means none besides a mortgage. Some even say "no debt except the car loan and two small credit cards".
If you don't own a house, do you plan to?
Do you have ROTH IRAs? A 401k?
Do you have a one years expenses in easy to access emergency fund?
Do you plan to retire in 5 years? Pension?
If nothing else..the next 5 years, doing nothing but stashing it in a money market account or high yield savings account will add $180k to your $200k, so you'll have just under $400k. Will that be your retirement amount?
If you retire before Medicare eligiblity, you will need yo figure out your health insurance. We tend to need more health care as we age..that's just how it is.
Can you afford $10/yr for health care until Medicare kicks in?
When do you plan to start SS? if English is not your first language, do you plan to retire to your original country?
If you stop working, what will you live on after you stop working?
Along with the immediate above thought, ^, what are you necessary expenses per month or year?
What do you plan to do after working?
Do you have spouse or family to look after? Parents aging?
It's great you have $3k left over, but as someone above said "do you plan for to be there?" Or is it "just left".
Is that $3k after you contribute to 401k, 403b, Roth to the maximum?
A ROTH IRA if you don't have one might be a good idea. But it has rules and regulations...1) must be open 5 years before you can touch it; 2) since you are over 50, you can contribute a maximum of $7k/ yr to it, from earned income only. Look at Fidelity or vanguard or Schwab or somewhere to open it... DON'T open it at a bank or credit union.
You pay taxes on the money now, and it can grow tax free...no more taxes on it. No, $35k in it after 5 years isn't much, and if you don't need yo access it, it can keep growing tax free.
If course this requires you to actually invest it, but you can buy CD s within your Roth IF you don't care about growth on a larger scale.
Do you have heirs to leave it to? Do you have a will or Revocable Trust?
If you should become disabled for any reason, do you have a plan for that?
Are your future expenses going to be more or less than now?
Do you plan to 'age in place '? If so do you have LTC insurance? (LongTerm Care). ( that might be too expensive for you now..and they aren't really all they are cracked up to be.
Do you plan to travel?
Yup, you are doing well having that left over to deal with, but you need goals for it...as Dave Ramsey would say "give every dollar a name/place/job to do.
So what are your financial goals?
What is your risk tolerance? If you invest all $180k the next 5 years, and it all disappeared, would you still have enough to pay your bills?
Do you want it relatively "safe"? High yield savings accounts and money market accounts and CDs will insure your money is safe (up to $250k per depositor per account)
At $180k warning just 3% will give you an added, what? $5400/yr...but only after it's all accumulated will the 3% bring you that..each year leading up to can bring you a nice, but smaller amount, which if compounded will be higher balance than just the $180k you have originally to start with.
Do you need yo buy a new/we car in the future? You'll need up plan for that.
What sinking funds do you have/will you need in the future? (Like a new car in 5 years to start fresh upon retirement, or a vacation account to travel, or a home repair coming up?if you rent, do you know what your rent will be in 5 years?
If you own, property taxes in the future?
Are you planning to retire from current job and work part time? Donate your timd to charity (and what expenses to do so might you incur? Like gas to get to a charity? Or contributions to a charity?
These questions and more are what you need to look at.
Best as you plan.
And seriously, it is good that you have that to work with...many people have nothing left at the end of the month.
Thanks for taking time to answering my post.
yes i do own my house and its paid off. Market value is about 300k.
i have two cars 2014 and 2018 paid off.
i don't have roth or 401k..
i have cash for emergencies ..
earliest pension i can get would be 1200 in 3 years. after that SS payment at age 62.
And moving to to my home country is an option, because of healthcare .
Risk tolerance is conservative ..
Looks very clear that I need professional help. i just don't know where to go.
Thanks for all the replies... I am pretty good at saving but clueless about investing. I will definitely check in to my options.
I would google Jack Bogle and Warren Buffett and Index funds.Index Funds that track the broader market are the best choice for the common man according to Warren Buffett.
what’s best for the common man tends to be whatever vanguard is pushing at the. moment .
first it was index funds , then they came out with a survey to show how the common man gives up 2-3% a year by not having their money professionally managed by keeping their own poor investor behavior in the equation .
then it was an ad campaign about how well their managed funds do compared to indexing .
i don’t believe a thing they. say , it’s all about marketing
Looks very clear that I need professional help. i just don't know where to go.
A fee only financial advisor might be a good start. These companies meet with you (often virtually) and provide advice based on your situation. They typically charge a flat fee. They are strictly advisors so they don’t actually manage your money, and they don’t try to sell you anything. They can help you devise a plan.
as i always mention , i have found not one fee only guy i would recommend.
they are usually fee only because they lack the training , licensing and certification to get involved with other investment products or they wouldn’t be free only .
most of the time the fee only guys are low man on the totem pole .
the ones i tried were so far behind the times when it came to retirement planning methods.
we finally selected one that is fee based and also sells various products.
i prefer fee based then fee only
Last edited by mathjak107; 08-28-2023 at 06:17 AM..
OP, you don't HAVE to get professional help.
Learn to manage it yourself -- just keep it simple if that's what you prefer.
Even with a professional you have to do your own due diligence -- at least enough to know whether what they're saying is true and advisable.
I don't have million yet, but could conceivably get there.
I favor index funds, and some growth managed ones also. I have about a 75/25 stocks to bonds split at 63 yo.
I would suggest to anyone: do your research and don't invest in things you don't understand.
My research has been news from all kinds of sources: news stories, articles, the Internet, here on CD -- all with the appropriate cross-referencing, corroboration, verification of course.
Am I saying take advice from strangers on the Internet? No.
Am I saying you can manage your own money -- IF you want to? yes.
I have friends who have an advisor who for decades has had them in load funds. And they're happy with the result. Could they have done better on their own?. They don't know and don't care.
They never wanted to manage their own accounts and accept that the fees and expenses are the cost of having someone do what they didn't want to.
I saw their advisor. And liked her.
She said I'd done well so far, but thought she could improve on that. I asked her what would she suggest. And she basically said well if I tell you that you can go do it without me. And I said well if you don't tell me where you're going to put the money, then I don't know whether I could keep doing better -- or well enough -- without you.
YMMV. Good Luck Sounds like you've done great so far keeping things fairly simple.
Depends on who you use I guess. I worked with an excellent fee only advisor and got great advice, some tax planning and access to a really good tool. All for a few hundred bucks. I think it would be a good fit (and low risk) for someone like OP who is just getting started and wants to learn.
what’s best for the common man tends to be whatever vanguard is pushing at the. moment .
first it was index funds , then they came out with a survey to show how the common man gives up 2-3% a year by not having their money professionally managed by keeping their own poor investor behavior in the equation .
then it was an ad campaign about how well their managed funds do compared to indexing .
i don’t believe a thing they. say , it’s all about marketing
A study by Fidelity showed that their clients' best performing accounts were the accounts that the clients had forgotten about. In other words, the best performing accounts were the ones that were not "managed" by the client at all, so they were not losing the 2-3% a year like the active accounts.
This also shows that timing the market is a fool's game. Costing yourself 2-3% a year for a sustained period is going to create a huge opportunity loss over time.
Regarding that "fee only" crap. There IS NO PERFECT compensation method. There can be a conflict of interest whether the advisor takes a flat fee, a % of AUM or fee only. IMO, the key is finding someone you can trust. I would talk to any affluent people you know to see if they have any recommendations. Talk to several potential advisors until you find one that doesn't talk down to you and you feel you can trust. Check out their online reviews, but with a grain of salt.
To the OP - I see you have some income from a pension and SS. But no retirement accounts? Where is the rest of your income going to come from when you retire?
Even if you save 3K per month for the remaining 5 years, that's only $180,000 plus any capital gains/dividends/interest. If you go by the 4% withdrawal rate, that's only $7200 a year. It's great that you don't have a mortgage or car payments, as I don't see a high income after you retire, unless I'm missing something.
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