Man it’s been a long time coming. Over two years ago I wrote a blog post asking people to share their best short term investment strategies. Once you’ve saved for the present (emergency fund and savings account) and saved for the far future (retirement) there is only one thing left to do, save for the near future. Crap. I haven’t done that.
Like at all.
Practice what you preach right? Just before the election I opened up a taxable investment account with Wells Fargo. Why Wells Fargo you ask? My Roth IRA balance qualifies me for a PMA account. PMA accounts have some pretty epic perks, one being that customers can make 100 free trades each year. No other banking product, that I’m aware of, offers something similar.
Anywhoozle, after my taxable investment account was created (took about 15 minutes on the phone), I moved $2,000 in to it. It sat there for two weeks. Untouched. I was scared.
Did I really want to pull the trigger?
Was I ready to start investing for the short-term? I can stomach a loss when I know my money has 40 years to play catch up, but can I really handle a tumble when I’ll want/need that money much sooner? Only one way to find out, right?
Yesterday, I bought $2,000 worth of VTWNX, a Vanguard retirement mutual fund. Yeah, that’s right, to accomplish my plan of investing outside of retirement, I invested in a retirement fund. Suck on that Personal Finance gurus.
My actual retirement accounts are all stocks, since no other investment has outperformed the stock market over the long haul. For my short-term investments, however, I wasn’t willing to stomach as much risk.
This 2020 fund is balanced as follows….
As each year passes, the asset allocation of bonds will increase, and stocks will decrease. Each year my investments become more and more conservative, since my time horizon to needing that money decreases. How sexy is that? Answer: Extremely Sexy.
Now I obviously don’t expect to earn a 10% return on my taxable investments, but it sure as heck should beat the crappy 0.8% my “high yield” savings account pays. After we’ve reached our $100,000 savings goal, we’ll likely begin shoveling virtually all of our discretionary income each month in to this fund, and/or a few other funds like it.
It’s scary and exciting all at the same time, but man does it feel good to be proactive about saving for my 30’s and 40’s. How many of you have taxable investment accounts? Aside from retirement accounts, what investments tickle your fancy (real estate, creating passive income, buying gold, etc)?