35M married with a child. I own what I consider to be my forever home (still owe approximately 450k) and have no other debts. I have a decent income and already contribute to my 401k and Roth on my pay checks (not maxed out but maxed the match). My expenses take up the entirety of my monthly income. BUT my savings each year comes in the form of a commission check. I had a good year last year and want to invest approximately $55k. My initial thought was to dump it all into VOO and let it sit for 30 years and retire on it and the 401k/Roth. Before I pull the trigger. Let me know your thoughts on what you would do in this situation?
What should I do with this money?
byu/mo_ghra inpersonalfinance
Posted by mo_ghra
8 Comments
Well Done! I’d suggest paying $25k towards the outstanding mortgage which is actually an investment in your forever home being paid off much sooner. Then add to the emergency fund, say $5-10k and take the family on a really nice vacation after maxing out the Roth contribution.
Do you have have an emergency fund? Because that portion of your savings should be in a HYSA or similar. Not invested.
That’s a lot of text with no budget still confused on what you need help with
What is the mortgage interest rate? 5.5%+ pay it down. Under 5%, put it in your efund until fully funded, then fully fund tax favored retirement accounts, then non-tax favored investment account.
For long term planning, look up Bogleheads. A thriving community discussing financial planning and wealth management. And they keep up with all the tax rules.
Short term, give it to me. (I jest)
VOO is a solid long term move but make sure you have 3 to 6 months of expenses saved first. You could add some international or bond ETFs for diversification and consider paying down your mortgage if the rate is high. If the rate is low investing the full amount is likely the smarter play.
if you want to “dump it all into VOO and let it sit for 30 years and retire on it”, why wouldn’t you use it to max your 401k contributions for as many years as it will do you instead of investing it in a taxable account?
Max out your 401k. Pay down some of the principal on your mortgage but also treat yourself to a gift to celebrate your big check.