What I’m Doing With My Money Right Now

---

Disclosure: This post contains affiliate links and we may receive a referral fee (at no extra cost to you) if you sign up or purchase products or services mentioned. As an Amazon Associate, I earn from qualifying purchases.

---

I’m pretty excited to see that our net worth has grown over $70,000 in just three months since I wrote the post $1 Million Net Worth… Now What?.  It’s great to see my money continuing to grow, but there’s still a downside to it.

Most of the money is tied up in the stock market right now and it’s a bull market right now.

No one has a crystal ball to tell us if this is only the beginning.  The gains could just keep rolling in for years to come.  It’s also possible, however, that we’re at the top of the market and a recession is just around the corner.

I don’t know what’s going to take place in the near future, but I’m hoping for the latter.  If you’re retiring soon or you’re already retired, you’re probably not wishing for a downturn as much as I am.

Sure, it’s great to see my money continuing to grow in the market, but I’m not ready to retire yet and I’m feeling like I’m paying too much for my investments.  I’d much rather be buying low and then selling high down the line.

Regardless, sometimes it makes sense to optimize your strategies depending on market conditions.  For example, in the real estate market, the time when you buy or sell a house can make a tremendous difference in your financial affairs.

And then there’s the good ol’ stock market.  The golden rule when investing in the market is to stay the course because you can’t win when trying to time the market.  That’s what I’m doing with the bulk of my money – just continuing to keep investing in the stock market.

However, with some of our other money, I’m being a little more cautious.  I’m using this unique time as an accumulation period so I’m ready when the tides change.

When the markets turn – and they always do – I want to be in a position to take advantage.

 

Here are a few things I’m doing with my money right now…

 

401(k)

My job provides a very good 401(k) program due almost completely to the match.  In a nutshell, we’re talking about a $0.35 match for every dollar I contribute with no max (up to the federal limit).

It’s hard to beat free money like that, so I continue to max that out every year.  This one’s a gimme.

The important point though is what I’m doing with my money within my 401(k) plan given the way the market is right now.

As boring as this may be, the answer is that I’m just continuing the stay the course like I mentioned earlier.  I put everything into a Vanguard Target Retirement Fund (that’s my best choice of the investments in our plan).

So nothing very exciting here and that’s the point.  When you’re investing in the stock market, boring is usually going to be your best bet.  You just continue to contribute and invest in low-cost index funds and, over the long haul, it should grow better than it would if you tried to complicate things by aiming to time the market or buying complicated financial products.

 

 

Real Estate

Some of you know that I’ve been on the lookout for another couple of duplexes to buy and rent out.  Well, unfortunately, I haven’t found a deal I liked so far… it’s a seller’s market and people are bidding on properties that are selling in a matter of days instead of weeks or months.  To top it off, it seems like it turns into a highest-bidder contest for a lot of these properties.

I’ll pass.

I’m still keeping my eye out for a deal, but the likelihood of finding what I’m after is pretty small in the current market.

So in the meantime, I continue to just keep building up a reserve to have on hand when the time comes.  I hope it’s sooner than later, but I have a feeling we have a little longer before the real estate market takes a dip.

Right now, I’m just keeping this money in an online savings account.  I’ve always liked Ally and I’m ok with my 1% interest for the time being.  I want that money ready to go when I need it.

I continue to have a good chunk of money transferred over to the account after every payday.  With the exception of my 401(k) contributions, this is where most of my money is currently going.  In other words, I’m stacking up cash so I’ll be ready to go when the time comes.

 

Roth IRA

I’m still funding my Roth IRA and will max that out for the year, but I’m not buying anything within it for the time being.

Yes, I know I just preached to stay the course, but I’m being patient on this one.

Wait a minute – are you saying you’re trying to time the market?  Crap… uh, I guess that kinda could constitute as that.

Didn’t you just say that I shouldn’t do that?  Yeah, but…

Isn’t that a bad idea?  Um, yeah… but… Ok, fine, it is a bad idea.  In fact, pretend you didn’t even see this section of the post!

My Roth IRA is at TD Ameritrade and I haven’t figured out a way to have it just automatically buy shares of Vanguard Total Stock Market ETF (VTI) as contributions are added.  So instead I need to login periodically and buy the shares manually.

Because of that, I started with a little cash in there and thought, “eh, I’ll just wait for a bad day in the market before I buy.”

Yeah, unfortunately, we really haven’t had that bad day I was after (at least since this post was written).  So the contributions keep going and the investing has not.

I have about $6,000 in cash just sitting in the account doing nothing.  It’s not a huge amount to worry about so I’m just leaving it for now.  If that bad day doesn’t come soon though, I’m going to start getting the shakes!!

Don’t follow my actions on this and keep plugging away at buying shares of low-expense index funds, particularly Vanguard… that’s the smart move to make.

In the meantime, my Roth IRA has been a mish-mosh of individual dividend stocks I had purchased over the years when I thought I could be a stock-picker.  I’ve since decided that I want to just invest in VTI to help spread my risk across the entire market instead of just having all my eggs in one basket with a few dozen stocks.

Because of that, I took advantage of the high stock prices recently and just sold off most of the stocks I have in there.  Now the plan is to take all that cash plus the cash already sitting in there and use it to buy shares of VTI.

The question is, will I buy it now or wait it out for a market dip… sssshhhhh, guess we’ll have to wait and see!  😉

 

HSA

Right now, I have around $15,000 in my HSA.  The interest rate for the account is currently 0.40%.

The good news is that the rate is much better than most bricks and mortar banks are offering.

The bad news is that the rate still sucks.  My money’s going to get eaten away by inflation in no time!

However, I’ve reached a balance in the account now where I’m able to start investing.  I hesitated for a while on this, but I recently decided that investing makes the most sense.

The fund choices I had available really stunk for a long time, but they coincidentally got a lot better as the DOL Fiduciary Rule deadline started to creep up. 🙂

I now have the choice of a lot of Vanguard funds, which is much better!  The expenses for the funds are still a little high, but from what I understand, that’s not unusual for HSA plans.  Still, at around 0.42%, that’s probably doable and will likely be a small cost in relation to the shares growing along with the market.

It’s recommended not to invest a portion equal to your annual deductible as a “just in case.”  Our annual family deductible for 2017 is $7,000.00.  So, if I follow the recommendation, that leaves me with around $8,000 to put to work.

So my game plan on this is to jump in and start investing.  Now I just need to decide if I want to play the stupid card like I am with my Roth and wait for a downturn or if I want to be smart and just pull the trigger and ignore the noise.

---

It’s always interesting to watch the ups and the downs of the market.  The important point is to just keep moving forward.

Follow my plan on continuing to invest like I do with my 401(k) and not the thought of being smarter than the stock market like I’m doing with my Roth.

Then there’s the real estate.  I hate sitting on the sidelines instead of buying some new rental properties, but right now it doesn’t make sense to buy (unless a great deal pops its head).  In the meantime, saving my money for when a downturn occurs seems to be the right move.

That’s a little background on my plans… your turn!

 

Now that you know what I’m doing with my money – what are you doing with yours?

 

Thanks for reading!!

— Jim