Suggestions on investments?

My husband and I have been very careful about saving our money. We currently have a savings account with about 6 months worth of expenses saved up. We also have a 401k through my job that I contribute to and a Roth IRA we don’t really contribute to but just let grow, though not a ton in either of those yet. We also currently hold a mortgage and a small car loan, and those are our only two liabilities and we pay extra on those every month.

So I’m looking for suggestions on where we could maybe start putting our money to actually grow it rather than having it sit making pennies in a savings account (it’s a high interest savings account, but due to lowering rates, that “high interest” is now very low.) I’m interested in investments for long term growth as well as things that can generate passive income with minimal management. Any and all suggestions welcome!

1 Like

@jill.m I sure feel your pain on this one! Low interest rates are great when you’re borrowing money, but not when you have money sitting in the bank. Unfortunately, there aren’t any great answers here.

You’re going to get low interest rates for pretty much any savings account, CD or money market funds, but these are really the only safe places to store your savings. You don’t want your emergency fund invested in the stock market, and really six months’ savings is the gold standard for emergency funds. So, as much as it pains me to say it, I’d probably keep the six months’ savings parked where it’s at, even if that means earning pennies.

That said, since you have your six-month emergency fund (and kudos to you on that — that’s a huge accomplishment!), I’d definitely consider investing additional money using your Roth IRA. For most of us, the best way to achieve growth is with a low-cost S&P 500 index fund. Here’s an article I wrote about them a few months ago. It’s Warren Buffett’s favorite option for most investors.…ting/sp-index-funds/
Since you don’t have a lot of retirement savings yet, I’d focus for now on growth, rather than passive income. Good luck!

Also, I’d love to hear any tips you have on saving six months’ worth of expenses! How long did that take to build?


Thank you for the suggestions! I’ll definitely take a look into that and maybe start putting what we can into our IRA.

As far as saving our six months’ worth, it’s been a combination of luck and hard work! For starters, my husband and I both work (so two incomes) and we don’t have any children, so we already have fewer expenses than a lot of people our age who are starting to have children or have young children. I hear kids are expensive, so I’m sure that plays a big part! But in addition, I do transcription on the side for the sole purpose of putting that money into savings or for out of the ordinary big ticket items like a vacation or down payment on a car or something. I manage our budget closely and keep spending on things that aren’t necessary to a minimum and ensure that after all monthly obligations, we still have some we’re putting aside. If it’s getting to the end of the month and our budget is looking tight, we look at what we can cut for the rest of the month to be sure we’re saving at least something. And anytime we pay something off, such as a car loan or student loans, we take the monthly amount we were paying for that and start putting it into savings, rather than spending it on something else.

It’s hard to say how long that took us to get here. We both had some savings when we combined finances about 5 years ago, though not much, and also paid off debt using some of it, which took out a huge chunk of savings at the time. All in all, I’d say it took us about 3 - 4 years to save that much. It’s something that didn’t feel possible for a long time, but eventually got there!

1 Like

Read the book Bogleheads and learn about the 3 fund portfolio. Great information about investing.

1 Like

I have many investors shifting money into real estate in various areas (opportunity zones, developing areas, land, short-term rentals, etc.). Depending where you live, budget, goal, and time can depend on your investment option. Free free to private message me your number if you want to talk more.

1 Like

Isn’t it true that a lot of it has to do with transaction costs? Creating a diversified portfolio requires multiple transactions; however, an exchange-traded fund (ETF) provides instant diversification with fewer transactions. It’s also worth noting that many of these expenses are fixed, allowing for economies of scale. As a result, the buffet has a cost advantage.

I honestly believe it is sound financial advice for the average investor. Those willing to devote a significant amount of time to the task may discover otherwise.