Hi!I'm out of college, married, and have a good joint income (approximately 130k / yr.). Of course, I live in a Bay Area so a lot of that goes out the window for rent! I have maxed out my 401k (my wife is a teacher, so, she doesn't have that option), I plan on getting a roth IRA for both of us also. Besides that I don't have a whole lot of investment outside of a savings account with about 2 months worth of expenses in it and several thousand in a checking account. That background put aside, I recently came across some decent supplementary income (60k now, 90k over the next months in equal monthly payments). So, what's my best investment path in the short term? Obviously I'd like to do something with this 60k that is coming on Dec 1st (some of that will go to those brokering the deal) and I don't want to lose too much to taxes. But, there may be practical applications to it. We just purchased our second car which we financed 23k @ 9.5% for 36 months. We have another car at 1.9% with about 9k left over 1.5 years). Those our only debts (no student loans, no credit card debt, no mortgage; again, I stress I live in the Bay area :) BUT, we do want to buy a house SOMEWHERE in about 5 years.Should I just pay off the newer car to avoid that 9.5% interest rate? Are there other tax free investments I should be looking into besides 401k and the Roth?What's the "foolish" path?
welcome senort01:So, what's my best investment path in the short term?Only you can answer what your best investment path is. But, your best course of action for the present would probably be to park the money in a money market mutual fund (most earning around 6% as of late), and educate yourself about any/all investments you may be interested in. No sense jumping into anything too hastily, learn what you're investing in, and why, before you invest....and I don't want to lose too much to taxes.Which may be another reason to stay put until the new year - mutual fund companies will be making their year-end distributions in the coming weeks, and if you buy shares in a fund before this occurs, you'll have to pay taxes on the funds earnings, even though you would have missed out on any possible increase in NAV.Are there other tax free investments I should be looking into besides 401k and the Roth?Remember, the Roth's contributions aren't tax free, but the earnings are, once you satisfy all the tax requirements (see IRS pub 590). What's the "foolish" path?As I stated before, educating yourself to be responsible for your own financial future is your best course of action. Have you read the 13 steps yet? Or gone to Fool's School? If not, Check out the link below to read the Fool's 13 steps, see: http://www.fool.com/school/13steps/13steps.htm?ref=HTI13stIf you're interested in investing basics, go to the home page, scroll down and look for the Basics, and Fool's School on the left hand side of the page. The Fool can't provide you with the answers, but it can provide you with the tools to find the answers.HTHBmF "Teach a man to fish and you feed him for a lifetime"(sorry ES, had to borrow)
I plan on getting a roth IRA for both of us also. At a joint AGI of $160,000 and above neither of you can contribute to a Roth IRA. It sounds like you'll exceed that amount for this year. If you do, your only option is $2,000 each in nondeductible traditional IRA contributions. You'll find details in IRS Publication 590.TMF ExROPhil Marti
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