I’m almost 26 I have 40k in a premium yield account. 1,500 in a savings account and another 1,500 in a checking account. I have 8,500 into a Roth IRA. I also have another 40k in the s&p. I also have about 8-10k in cash under my mattress. I’m single and still live at home so I don’t have any real bills or expenses. I’m also debt free which is a good thing. What else should I be doing with my money? Just feel like I could do more. am I ahead of the game? Behind? Or somewhere in the middle?
Thanks guys
Need a outside opinion
byu/EcstaticStation2070 inpersonalfinance
Posted by EcstaticStation2070
8 Comments
If you can find a good deal on a property, could be good to start building some equity rather than paying rent. ideally something you could rent out easily in the future
You have $90k in assets at 26 with no bills, no debt, and free housing and you are asking if you are behind.
You are fine. You are very fine.
The thing that is actually costing you money is the $8-10k under the mattress. That is just inflation silently eating your purchasing power every year. Move it to a high yield savings account or money market fund and at least have it earning something.
The bigger opportunity is that you are sitting in a rare window that most people only get once. No rent, no debt, high savings rate, young. The decisions you make in the next 2-3 years while this window is open will compound for 40 years. Max the Roth IRA every January first thing. If you have access to a 401k with any employer match, get the full match before anything else. Then keep building the taxable brokerage.
The premium yield account is worth understanding. What is it actually earning and what are the terms? Some of those products sound better than they are.
There’s a lot of additional information that is needed to understand if your. For example, if you make $30million, then you are far behind (extreme example).
I’d always recommend looking at the prime directive flowchart first (side bar) – it breaks down exactly what to do with your money and how to build upon it.
Beyond that some actual thoughts:
1) 8-10k cash under your mattress is losing money due to inflation. I personally don’t see any upside to keeping cash on hand, especially when it causes me to lose x% a year, which is inflation + potential returns.
2) Calculate how much of an emergency fund you have. Prime directive has advice on this, but generally you can aim for around 6 months. Any liquid cash above that is not being used efficiently.
3) Calculate out your budget, determine how much you are actually saving for retirement and go from there.
4) The good thing is you have retirement and savings. Time to optimize and set a long-term plan based on your goals.
I think you are far ahead of most people let alone people your age. I think it’s good diversification but I don’t like the 40k in high yields I’d move some more of that over to your ROTH IRA make sure you max that out every year. Maybe save the rest and buy a real estate investment not as much return as the market but helps diversify and it uses leverage and appreciates. Also someone else is paying for you to have an asset.
I do have a YouTube channel that will be covering alot of topics in the personal finance topic to help people better navigate life.
@moneybadgerus
Hope this helps
You’re doing amazing to be only 26 yo. You didn’t mention your income. If I were you, I’ll max out my ROTH IRA and set some goals (e.g. buy a house, travel, etc.) I’ll also keep investing. You may be able to pay cash for a house or have a huge down payment in the future. Many people are house poor. If they want to travel or need a new roof, it’s usually paid for with debt. Don’t be that person. Train your mind to pay cash for things.
Create a budget with goals and enjoy your money with boundaries.
you’re definitely ahead for your age, especially being debt free with that much invested already
Learn to trade for a 2nd income but with risk management at front of mind
You’re honestly ahead for 26, especially debt free. Only thing I’d tweak is less cash sitting idle and more invested or in a high yield account. Otherwise just stay consistent and avoid lifestyle creep.