That's why buying a house is one of the BEST investments. Generally speaking, of course. Heck by land, houses, invest in wind technology, etc. make sure you protect the value of your stash, in some way
Big reason why real estate attracts me. You find the right place in an up and coming market, rent it, use it, and then once that market has matured, profit greatly.
@EddieWasSnubbed ... you really need to be doing more like 15% of your combined income into retirement. Start with any 401k plans through work up to the company match, then you can contribute $5k/yr each in a Roth IRA assuming you meet income requirements. Assuming that is short of 15%, top it off with a traditional IRA/mutual funds for the rest. I would highly recommend taking a Dave Ramsey "Financial Peace University" class - they have local classes through churches or home study for less than $100 for the whole class. Some if it is based on getting out of debt, which you clearly don't need, but there are some really good investing basics and budgeting basics there. He also has a book or two with more advanced investing material that I haven't read yet but plan to. I think you and your wife would really regret not being more aggressive with investment later in life. At a minimum do some Vanguard target retirement or index funds, but with the amount of income you have to invest I think it would be worth it to pay a reputable adviser to help you out. If they can get another 1-2% return, their fees would be a drop in the bucket. Pay off any debt first. Do you own a house? Save up for a down payment if not -- if you're not ready to buy now, just keep building it up so that later you can lower your mortgage loan. If you drive an older car and will need a new one in the next few years, stow some aside for that. After that go with a Roth IRA and then mutual funds.
Vanguard 500 is an index fund that invests in 500 of the largest companies in the country. So it is like the S&P500, but under the Vanguard Group. Minimum investment is $3,000 with an expense ratio of 0.17%. You can open another investment account even though you already have a ROTH IRA.
IMO a home as an investment is not the best use of funds for most people. Historically stock returns beat real estate returns which pretty much just track inflation. Plus houses are pretty illiquid. Unless someone really understand what their return on a house would be or understands the landlord game it is risky as an investment. Home buying makes sense if you can own (mortgage plus upkeep, taxes, insurance, etc.) for less than you can rent. Also makes sense for people who otherwise would not be saving and for people who just want their own home as a lifestyle choice just not necessarily as an investment.
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Average S&P 500 return is close to 12% since its inception. Current average annual market returns right now is 7%. Based on historical data, 8% is the historical market average.
How does that relate to inflation, expenses and taxes? It's also period dependent, what would you have made in 2015? A 100% return one year is wiped out by a 50% loss the next year. Was the average over the 2 years 25%? Also I think, as computer driven hyper investment takes over stock market trading, the yield to retail investors are going to be lower. Did you know that the derivatives market is already larger than than the whole world's GDP?
Is there anyone here I can call to ask questions about financial advice without actually hiring someone to be a financial advisor?
Real Estate sounds intriguing. 25 years ago my father purchased a building that he rents out. He got it for 220k and it's worth 1.5 million now. Is there courses in college I can take for that?
First thing - even before investing - have an emergency fund of 3 to 6 months expenses. Even though you are living rent-free right now, it would be smart to include a future rent $$'s in that figure just to be safe. We put our emergence fund into a money market account instead of a regular savings because it will draw more interest than a savings account. We have access to that money through a debit card and checks at any time for emergencies. Then invest in mutual funds - do your research and only invest in some that have great long-term track records. Also, if you aren't already, contribute to your companies retirement plan up to the maximum that THEY match. Its an automatic return on investment. If they match up to the first 10%, stop there and invest another 5% somewhere else. You want to be investing a total of 15% in retirement.
People often underestimate the troubles of being a landlord or purchasing a house to live in. Home ownership is great when you do it right. People seem to forget, houses need to be cleaned, rooms need furniture and things, houses needed to be cooled and warmed, houses need to be maintained, yards need to be maintained, insurance is needed, etc., etc.
What TheMystery said, basically. My gratuitous advice is this, for starters, live well below your means. I don't suggest you go full nutcase, you know, foraging out of Whole Foods dumpsters and using newspaper for who knows what, but just because you can afford $X for a house payment or rent or a car payment or whatever does not mean you should spend $X. Spend less and save the difference. Save as much as you can. If you can get close to saving 20% of what you earn you will be kicking serious ass on most everyone else. I'm sort of ambivalent on the various IRA possibilities but if you have an employer who matches your contribution by all means max it out. If you can, be sure to invest it in a low-cost index fund like the Vanguard index I like. The Vanguard 500 is, to me, the single best vehicle for personal investment that exists. That is, if you're going to park your money and forget about it. If you want a bit more diversification you can look to other, smaller-cap focused indices like one of the Russell ETFs. A blend of the 500 and a Russell index wouldn't be a terrible idea. That same principle is what attracts a lot of people to the Vanguard total stock market index. Anyway, obviously, do your own research and make your own decisions but I strongly recommend broad index funds like the 500 or the total stock market over any sort of mutual fund. Their expenses are far, far lower and over time that makes a surprisingly large difference. But the main idea is to save as much as you can.
