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What is the next step in my personal financial situation?

I am 28 years old. I have no credit card debt. I have $18,000 in a high yield savings account (5? I have $2200 in Mutual Funds (made 10?o far YTD). I have $12,500 in my 401K. I own a house in Texas that I currently rent out. The rent pays for the mortgage. I rent in California and cannot buy as I am here only for a short period of time. I save approximately $1500 to $2000 a month. Where should I put this money? More mutual funds, high yeild savings, 401K, IRA or other? Do I have too much money in the high yield savings account? I am willing to take an above average amount of risk but nothing on the crazy risky side! Need some financial guidance world...please help! I know I'm not doing too bad, but I know I could be on my way to financial freedom in the future with some right guidance. Thanks!

Asked By: DLC - 6/21/2007
Best Answer - Chosen by Asker
GREAT JOB!!!! From just the info you have given, I'm not sure what your goals and dreams are. If you work this thing right you will be able to retire at probably 50. If I were you i wouldn't max out the 401k since you can't have access to that money until (at this point) 591/2 years old, in the future it might be older. $18,000 is great for an emergency fund. If I were you I would put that money into something called a VUL or an EIUL, these are insurance products that participate in the stock market, so you can get mutual fund rates of return. WIth these you can put in any amount you want (up to a point) much more than anyother product (IRA, 401K) and the money is usually liquid after the 1st. year. The EIUL has downside protection, so you are guaranteed not to lose.
Here is a link to a great company that has helped me.
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Good Luck
Answered By: Ben A - 6/28/2007
Additional Answers ()
Waw! That's mean you have a lot of cash. Becareful to manage it.
Answered By: Yvonne L - 6/28/2007
Put them into your highest yield account. This way you will collect the most money. Be careful if you plan on using the money for something in the near future (EG a down payment on a house.) If that is the plan, make sure you can withdraw it when you need it, most 401ks have pretty stiff penalty's for pulling money out early.
Answered By: rragsdaleii - 6/21/2007
Just from what you have written, there are three things I would do. First, max out your 401k. You can put up to $13,000 a year. Since you are young-ish, that will be the #1 way to create wealth in the future. I am not sure hwo liquid you want to be so keep that in mind as you decide where to put money. Second - I do agree that $18k is a lot for a savings account - BUT it is very smart to have 6 months worth of expenses saved (that is liquid for emergencies). 5?s not a bad savings rate either. I would explore an Oppenheimer fund. They pay around 8?? Lastly, I would go to your bank and have a conversation with one of the investment managers. This is FREE. All you want to do is talk to them about what you have going on and if the direction makes sense. They may or may not try to sell you things but that is why you are there. To learn about what are some options for your money. Good luck - it is very refreshing to read about someone who has actually saved money rather than sqandered it away on a BMW and Gucci shoes.
Answered By: GG - 6/21/2007
Personally, I would say put as much as you can afford into your 401k or a Roth IRA. The more you put into your retirement savings now, the more time it has to grow, and the less you have to put in over the years to reach your target amount.

Read "The Automatic Millionaire" by David Bach, he can show you how to maximize your retirement savings. Very inspiring!
Answered By: teresathegreat - 6/21/2007
Your savings account is, I believe, as it should be. I believe that this is a bad time to invest in stocks because I see them correcting themselves in the near future and you would be buying into expensive securities. Stocks and mutual funds are expensive.

Your answer really lies in your goals/dreams. Are you planning to buy another house, retire early, or have a month long blast in Ibiza? You have to save with an intention. A willingness to take risk is useless if the risk does not lead you to something. A General sends 100,000 troops to face 1,000,000 enemy troops to gain a target of no importance, nothing worthwhile to gain and a great deal to be sacrificed. A short-term goal requires a great net of safety. If you plan to retire early, you have some time and you can afford to invest more money in stocks (once the prices have corrected), taking the appropriate risk with the intention of being rewarded for that risk with larger gains and a longer time table to rebuild your losses.

What does you asset allocation look like? The money available could be used to correct deficiencies in your asset allocation in place of selling securities, pulling money from savings, etc.

On the other hand, you could spend a small portion of that for professional help. My view on expensive help: “Expensive help is cheaper than expensive salvation.” Ex. Having a lawyer do some leg work for 30 billable hours at $450 apiece before signing papers is a lot cheaper than having a team of lawyers, experts, and helpers fight for a year in court. If you do seek professional help, be cognizant of the fact that they are sales persons looking to sell their organization’s wares.
Answered By: Taurean W - 6/21/2007
Maxing the 401k is a good idea. Your tax situation will determine whether you should be maxing a traditional IRA or a Roth.

The next move is to educate yourself on at least one type of true investment activity, whether it be real estate, stocks or other. There are still good deals in the stock market and there's a case to be made for the real estate market to stabilize.

When you have educated yourself, then you should begin to invest in your chosen sector. Your savings account should be sufficient in size to carry you through for a given amount of time based on your own personal risk or future cash goals or needs. Some may need 3 months in cash available. Others may need only 2 weeks or a years worth (based on expenses in that given time). Begin investing the amount higher than this into that area you have learned. You'll make some mistakes but if you learn from them, you will be well on your way to your goals.
Answered By: John T - 6/21/2007
Awesome questions! For emergency savings, you want up to 6 months of expenses (think salary less taxes and savings) in a savings account where you can access it should something happen. $12,500 in a 401K isn't bad, but at 28 years old, you might want to be more aggressive about putting more into retirement savings - again, after you have the 6 months of expenses saved up. You can also consider an IRA that would allow you to draw on the money for a home downpayment - it grows tax deferred, but you can still access it for qualified items (college tuition for you or a child, home purchase, etc.). Give the average US household is $9,000 in debit, you're doing a great job!
Answered By: leftlovin_darnright - 6/21/2007
Wow congrats and kudos!

maybe all you need now is a maintenance

here is a free ebook for you
Answered By: Tutti F - 6/21/2007
401K
Answered By: PrettyBrownEyes - 6/21/2007
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