Current Events > Any investment gurus here?

(+) Yeah! (+)

I have around 15-18k that I'd like to do something with. Currently I'm injecting 10% of my salary into my employer's 401k (they match 5%)

It has to be low maintenance...preferably something I rarely have to touch or move.

I opened an online account to trade with a while back (yep, during the GME craziness). It has grown a bit, but nothing spectacular. It became clear there are many, many things going on that I'm not aware of or care to learn about. I don't have the energy or knowledge to make that pay off.

Am I better off just putting more in my 401k?
Just curious if there's anything out there I'm not aware of.

Am I better off just putting more in my 401k?

yes

Since it sounds like youre already snapping up the company match, the only benefit you get by putting it in 401k is the tax deduction. Not a bad thing per se, but you have to factor in the lack of liquidity should you want to tap into those funds for any given reason.

If you just want to load up with something low maintenance in your regular brokerage account, then VTI would do the job.

Yes, max out those tax advantaged accounts before you go to personal brokerage accounts.

If you want a bit more flexibility with your money, open a Roth IRA. After 5 years of the account being open, you can take out the money you put in at any time. The gains need to stay in until retirement unless you want to pay taxes and a penalty.

Slap that shit in the treasury or a high yield CD. Then take those profits and slap those shits into another treasury or high yield CD. Then take those profits and slap those shits into another treasury or high yield CD.

You get the idea.

First understand what the time horizon you're looking for with this money is. If it's for a short or mid-term goal like a car or a house downpayment within the next 5 years or so then it's probably best to just leave it in a high-yield savings account or look into bonds if you want to be a little fancier than a savings account. This is because in general the stock market goes up over time but if it were to have bad years when you wanted to withdraw then it would put your goals on hold.

If it is for a longer term goal, what's often suggested is after hitting your company match in your 401k (which you've done), invest the rest into a Roth IRA. The annual maximum you can contribute in 2023 is $6,500. IRAs are tax-advantaged so it's better than investing in a regular old brokerage account. The downside is that IRAs are meant for retirement, and so you're not supposed to withdraw from them until you're 60 years old (same for 401k). But Roth IRAs have some flexibility in that if you really have to, you are always allowed to withdraw the contribution (not earnings) you've invested into the IRA tax-free and penalty-free if you need to.

After contributing to a Roth IRA and getting your 401k employer match, you could turn toward putting more money into your 401k (up to $22,500 per year in 2023), or contribute to an HSA if one is available because it's another tax-advantaged account. Or if you really don't want the money to have any restrictions like retirement age and stuff at all, invest it with a taxable brokerage. You mention that you already have some kind of an account so as long as it's not with some weird company that charges weird fees then that's probably fine.

In regards to specific investments to pick - unless you know you are a very, very smart person who sees the future of company stock prices better than people with much more education and hours in the day (and perhaps a little bit of insider trading) do, you should probably just invest in broad index funds like VTI / VTSAX. They'll track the total stock market fluctuations so that you're exposed to everything and automatically diversified and also tend to have very low fees since they're not actively managed. VTI and VTSAX are identical - one is just the ETF version and one is a regular mutual fund. Depending on where your taxable brokerage is, they might have their own version of those funds that are just as good and track the same exact index.

Have my reading material for the evening!

Seriously though, thanks to everyone that's responded so far.

I have to digest this kind of dialog in spurts. I'm good at some things, but this certainly is not an area I'm comfortable in.

3.5% yearly return at this point in time with no obligations to hold it there for a long time like with a CD: https://www.discover.com/online-banking/savings-account/

You may also want to look into I Bonds. Theres more of a holding requirement, but the rates are still nearly @ 7% so if you dont mind parking up to $10k for a while and want more of a guaranteed return, there ya go

https://www.treasurydirect.gov/savings-bonds/i-bonds/