What is the next step in my personal financial situation?

Question

I am 28 years old. I have no credit card debt. I have $18,000 in a high yield savings account (5%). I have $2200 in Mutual Funds (made 12% so far YTD). I have $12,500 in my 401K. I own a house in Texas that I currently rent out. The rent pays for the mortgage. I rent in California and cannot buy as I am here only for a short period of time. I save approximately $1500 to $2000 a month. Where should I put this money? More mutual funds, high yeild savings, 401K, IRA or other? Do I have too much money in the high yield savings account? I am willing to take an above average amount of risk but nothing on the crazy risky side! Need some financial guidance world...please help! I know I'm not doing too bad, but I know I could be on my way to financial freedom in the future with some right guidance. Thanks!

Answer 1

Traditional steps to financial freedom:

1. Put enough in your 401k to get any company match.

2. Save 3-6 months expenses in cash in case of job loss, illness, emergency, unexpected expense, etc.

3. Max a Roth IRA ($4,000 this year). I'd open it at Vanguard--great funds, great reputation, no fees, low expense ratios, plenty of variety of options. Pick a target retirement date fund and forget about it. Fidelity is a good 2nd choice, but I really like Vanguard.

4. Go back and add to 401k until you max it ($15,500/yr), AND/OR start saving for the downpayment on a home (in your cash account) for when you are settled down somewhere.

Good luck! If and when you are mastering these steps, you can think about investing in more rental real estate or starting your own business to propell your earnings/assets. But make sure you have this solid foundation in place first.

Answer 2

At your age, you must be better off than about 80% of the persons around you of same age.
A Roth IRA has always seemed great to me. Do you have one? It sounds as though you could be pretty comfortable by about age 50 (although the markets are due for a big fall soon, so brace yourself for a possible "loss" on Wall Street if you invest heavily there). The usual rules apply to you: Diversify, and buy healthy companies. Apple (symbol AAPL) and Wal-Mart (WMT) have been recommended recently. Some people think United States Steel has still more upside (symbol X), though it has already been a stellar performer, so you might be buying high.
Best Wishes.

Answer 3

I say your doing pretty good.

But, you need a stream of income that will last forever with or without you efforts. Network marketing is the solution. This system of distribution is the best business structure known to man. This is a fact. I'm with a company that has solid roots (25 years in business and multi-billion dollar company which does business in more than 40 countries) and will be in business for many generations as this is big family business. We have award winning concentrate herbal food and skin products that regenerate people's well-being and finances. I can prove this is a very good company to work with.
By your money earnings you must be a pretty smart person that knows a true opportunity when you see it.

I am ambient health ..

Answer 4

You should have the equivalent of six months expenses in an emergency fund. If the 18K is not sufficient, add to this first. If it is, then add to the mutual funds (I'm assuming they are low cost and no load). Avoid "full service" (read "commission") brokers...you are doing great on your own! This country needs more savers like you!

Answer 5

It's hard to believe you have done so well for yourself and yet believe you can get reliable financial advice on this site! Get some professional financial advice. You can afford it.