Financial advice - options instead of a savings account??

I'll start right off the bat with this... yes I know it's ATS and no one here [at least none that I know of ] are professional financial advisers or anything of that nature. That's why I posted in the general chit chat! I'm simply looking for advice from other folks on how they handled their financial situations throughout their lives or at any point in their life currently. Now that I got that out of the way, I'll begin my post:


So basically, I am in my mid 20s and have recently graduated college and about 2 years ago I began my professional career (engineer at a medical device manufacturer). I have very little bills other than the standards - vehicle, student loans, etc. About 30-40% of my salary goes to my savings. I have always been very financially stable - I worked multiple jobs since I was in my early teens, I have always been busy doing side jobs on the weekend and I was always the one in high school and college who had to go work after class. Although I don't come from a family of money, I have always been self conscious of my finances and have never ran into any problems.

Now that I have began a professional career I've found myself accruing money in my savings account at a rate much faster than I have ever anticipated and I am looking out to you folks on ATS for ways to keep my money safe & not lose too much value, but also ways to potentially make the best of this capital. I look at my savings account at my local credit union and the 0.1% APY and think that there are much better things I can be doing that will help me out in the long run, but I just don't have the experience in this area to know what to look for. I come from a family of farmers and skilled tradesmen, none of which are known for their expertise in the financial industry.

I've read up on money market accounts, money market funds, CD, treasury bonds and even stocks but I'm having a hard time deciding where I would like to go. Ultimately I will talk to some friends and see if they have any references to financial planners in my area to talk with a professional about this, but I'm curious what my friends here on ATS have to say! There are a lot of bright minds here, so if anyone has any advice or input please share!

I know a guy who uses his savings to help entrepreneurs with start ups or small businesses to expand. Another who does private mortgages. Both better ROI than a bank and safer than the stock market.

Keep some cash, buy physical gold or silver, take delivery on it and have a good safe to keep it in. With the low price of silver and gold right now, it's a buying opportunity. Five years ago I started buying silver between 17 and 18$ an ounce, when silver went to 48$ an ounce I sold it all, made a hefty profit. I stayed out of the markets until just recently, buying silver again. If the dollar crashes I need something to fall back on. Good luck.

originally posted by: charolais
I'll start right off the bat with this... yes I know it's ATS and no one here [at least none that I know of

] are professional financial advisers or anything of that nature. That's why I posted in the general chit chat! I'm simply looking for advice from other folks on how they handled their financial situations throughout their lives or at any point in their life currently. Now that I got that out of the way, I'll begin my post:


So basically, I am in my mid 20s and have recently graduated college and about 2 years ago I began my professional career (engineer at a medical device manufacturer). I have very little bills other than the standards - vehicle, student loans, etc. About 30-40% of my salary goes to my savings. I have always been very financially stable - I worked multiple jobs since I was in my early teens, I have always been busy doing side jobs on the weekend and I was always the one in high school and college who had to go work after class. Although I don't come from a family of money, I have always been self conscious of my finances and have never ran into any problems.

Now that I have began a professional career I've found myself accruing money in my savings account at a rate much faster than I have ever anticipated and I am looking out to you folks on ATS for ways to keep my money safe & not lose too much value, but also ways to potentially make the best of this capital. I look at my savings account at my local credit union and the 0.1% APY and think that there are much better things I can be doing that will help me out in the long run, but I just don't have the experience in this area to know what to look for. I come from a family of farmers and skilled tradesmen, none of which are known for their expertise in the financial industry.

I've read up on money market accounts, money market funds, CD, treasury bonds and even stocks but I'm having a hard time deciding where I would like to go. Ultimately I will talk to some friends and see if they have any references to financial planners in my area to talk with a professional about this, but I'm curious what my friends here on ATS have to say! There are a lot of bright minds here, so if anyone has any advice or input please share!

I am not a professional financial advisor and everything I say is opinion. I was licensed as a commodities broker many years ago, but I no longer hold any license.

With that out of the way...

Any outstanding debt you have is essentially negative equity based on the interest rate. Aside from having an emergency fund of cash all of the money your are pouring into savings should be paying down your debt. Even if you have a low interest rate that's still a net loss over time. Pay down the vehicle and student loan debt, starting with whatever is smaller, as fast as you can.

Once you've done that you should be maximizing the amount you can invest in tax free ROTH IRA. After you maximize that you can invest in stocks indexes. You may be further ahead to stockpile money, after paying off the debts, in a savings account until the stock market crashes. It will crash eventually... and buying on the low end is always better.

Money market accounts are good for maintaining cash value, but they don't keep up with inflation and over time stock indexes do better.

A Roth IRA may be a good idea... a higher return than a interest checking account and it can be withdrawn before you retire with a much smaller hit than a traditional IRA ... the point is those are to make sure you have money when you retire..

I have a 401k through work, and a standard IRA from my previous job.. along with a standard interest checking account for emergencies .. I keep about 5-6 grand ( and contribute $300/mo to it ) .. I keep at most $3,000 in my checking for regular spending .. I'm always tweaking my allocations ..

A CD isn't bad, just can't touch it for a set amount of years which if you make it too small you will get a smaller return.. I look at it in the long term and I don't screw with the stock market except for a small bit using automated investing ( betterment.com ) .. it's free but they take a commission on earnings... the bonus there too is you can withdraw it at any time.

Just some options! I've been looking at this stuff for a few years now.

Edit:

Based on what Ksihkehe - Just to add, I personally have zero debt at this point so I've been maximizing my savings because I know debt will come in at some point again.. hell I also keep a cash emergency fund as well, about $300 at the moment .. saving whenever you can and forgetting about it is good

a reply to: Ksihkehe

Thank you for the reply! I should have clarified, when I said vehicle bills I meant insurance and such. My only debts are student loans and a small small amount of credit card debt (less than a grand, I'll call it negligible for the time being compared to my student loans).

I've been tossing around the idea of making very large loan payments to pay them off quickly (I figure I can easily do it in under a year if I subsidize a little bit from my savings), but I guess you can call it natural greed that has been keeping me from doing so. You're not the first person to tell me to pay up now and get those loans out of the way.

Thank you

originally posted by: charolais
a reply to: Ksihkehe

Thank you for the reply! I should have clarified, when I said vehicle bills I meant insurance and such. My only debts are student loans and a small small amount of credit card debt (less than a grand, I'll call it negligible for the time being compared to my student loans).

I've been tossing around the idea of making very large loan payments to pay them off quickly (I figure I can easily do it in under a year), but I guess you can call it natural greed that has been keeping me from doing so. You're not the first person to tell me to pay up now and get those loans out of the way.

Thank you

That's exactly what I did .. I bought a new mustang several years ago and I paid double the payment each month so I could pay it off much sooner than the terms on the loan .. saved money on interest due

originally posted by: miniatus
A Roth IRA may be a good idea... a higher return than a interest checking account and it can be withdrawn before you retire with a much smaller hit than a traditional IRA ... the point is those are to make sure you have money when you retire..

I have a 401k through work, and a standard IRA from my previous job.. along with a standard interest checking account for emergencies .. I keep about 5-6 grand ( and contribute $300/mo to it ) .. I keep at most $3,000 in my checking for regular spending .. I'm always tweaking my allocations ..

A CD isn't bad, just can't touch it for a set amount of years which if you make it too small you will get a smaller return.. I look at it in the long term and I don't screw with the stock market except for a small bit using automated investing ( betterment.com ) .. it's free but they take a commission on earnings... the bonus there too is you can withdraw it at any time.

Just some options! I've been looking at this stuff for a few years now.

Edit:

Based on what Ksihkehe - Just to add, I personally have zero debt at this point so I've been maximizing my savings because I know debt will come in at some point again.. hell I also keep a cash emergency fund as well, about $300 at the moment .. saving whenever you can and forgetting about it is good

Thank you for the contribution

I also have 401k through work, but am only contributing 5% at the moment until I decide what I would like to do.

buy a house and pay it off as quickly as possible that way no matter what happens to you or to the economy you will always have a free place to live.

originally posted by: charolais
Thank you for the contribution

I also have 401k through work, but am only contributing 5% at the moment until I decide what I would like to do.

I decided to maximize my 401k because it's pre-tax .. increasing the amount you put in will have minimal impact on your check because of that

originally posted by: Tardacus
buy a house and pay it off a quickly as possible that way no matter what happens to you or to the economy you will always have a free place to live.

I've actually thought about land and/or a house. I had a neighbor selling 30 acres of landlocked farm land (has a right of way through someone's back yard) that he would let go for under $30k, but I was too gun shy to pursue it.

originally posted by: miniatus

originally posted by: charolais
Thank you for the contribution

I also have 401k through work, but am only contributing 5% at the moment until I decide what I would like to do.

I decided to maximize my 401k because it's pre-tax .. increasing the amount you put in will have minimal impact on your check because of that

That's one thing I noticed right away when I first started my 401k. I was anticipating a 5% drop in my take home, but really it was only about 2-2.5% due to being pre-tax.

Go to the forums here: Mr. Money Mustache

No load mutual fund that indexes the S&P 500. Lowest fees you can get such as Vanguard (one example). Average return over time, including depressions and corrections, is 10%. Don't be greedy. Be the tortoise, not the hare, and you'll do fine. It's worked for 100 years: through the Great Depression and the Great Recession, and every correction in between.

a reply to: charolais

I'm glad you have no vehicle debt, it's best to have a used vehicle with a good track record. Let somebody else pay the premium of a new vehicle.

You should pay off that student loan debt, imagine how good it will feel to be completely debt free. At the same time a bit of greed isn't a bad thing. You should always have a cash reserve for emergencies. Three months of expenses is a good place to start.

If you plan on buying a home you will want to keep your investing in liquid funds so that you can move that money to buy a home. Buying a home cash is awesome. You're young so you may want to consider if you plan on staying where you are or following the money.

There are some telling you to invest in gold and silver. While those things can be a part of an investment strategy I'm not sure that's a good route right now. When you invest in commodities like gold and silver you need to keep an eye on historical values and right now, given the abnormal state of the economy being propped up by the fed, I don't think gold and silver are a good buy. They will go up as inflation hits after the rate hikes, but I think if you look at historic prices they will eventually drop lower and be a much better buy in 2 or 3 years.

Even with the inflated prices you can't go wrong buying a market index fund. Even if it drops history tells us that it's a good investment. Right now is a good time to be paying down debt. In a year or two it will probably be a very good time to be dumping as much as you can into the markets.

a reply to: charolais

precious metals, cash, just keep a chunk of it in cash outside of the bank and in other forms

Remember the "haricut" in Cyprus? They'll pull that sh*t on you or me too... ANY day

a reply to: charolais

Buy. More. Art!

Yours sincerely
Sotheby's

a reply to: charolais

Dave Ramsey

Start here

a reply to: charolais

Land, Underground Bunker, Years of Food, Years of fresh water, Guns, and Ammo

a reply to: Atsbhct
I love that guy! I've read almost everything on his site! In fact, last night I was reading a link on the newsletter he sent a few days ago! This is how I'm living my life now!