HomeInvestingHow many of you invest outside of retirement?

How many of you invest outside of retirement?


I’m currently of the mindset that Girl Ninja and I have enough job security and enough liquid assets we can afford to quit saving money. It’s a fun place to be in for sure, but it is also extremely intimidating. Throwing excess income in to a savings account each month takes virtually no effort. Investing money in short-term investments, however, requires one to be much more proactive.

I could take the easy way out and just increase our retirement contributions to some insane amount, but that doesn’t really help us much. Sure, we’d be super rich when we are all old and wrinkly, but what good does that do my 40 or 50-year-old self?

I’ve said it before and I’ll say it again…

  • I’d way rather have $1,000,000 waiting for me on my 50th Bday (side note: today is my 28th birthday) and $2,000,000 in my retirement accounts, than just having $5,000,000 waiting for me at 65.

That’s just me though.

Maybe you’re different? Who amongst you ACTUALLY is being proactive about investing in shorter term assets? Throwing a couple bucks at some random stocks isn’t what I’m talking about. Strategic, consistent, and significant allocation of discretionary income is what I’m looking for.

If you don’t, why not? If you do, what specifically have you chosen to invest in?




  1. Ah man, I’ve been racking my brain, heart, and soul over this stuff lately. As much as I would love to earn a better rate of return on my money, I STILL cannot get myself to risk the principal. I still fear Wall Street and do believe there are many more Bernie Madoff’s and Lehman Brother’s out there. Good thing inflation has been low…not.

  2. Here is some background info: Retirement Accounts are fairly new in my country. In the past everybody relied on the SS system which is not enough anymore. So, the retirement accounts started late 2003 and I opened one back in early 2004. Since they are so new, everyone is still skeptical about them. Nonetheless, I had been contributing to it regularly and following the US bloggers and their strategies, and as a result, my account has been earning pretty well.

    Yet, I cannot rely on that alone. I have set aside a healthy EF with enough money to cover me for a full year. That sits in two separate savings accounts. Why two? If I need to tap it for a little money, I will not jepoardize the whole interest.

    And now the answer to your question:

    I also have an investment “basket” which consists of individual stocks, gold and US Currency. I fund this basket regularly but these days I have stopped doing that since I need to do some home improvement projects and I am saving up for them. I re-balance this portfolio on a yearly basis.

    I also own a rental apartment as a part of my investment and I still have 10 months of debt (sort of like a very short-term mortgage) on it. I collect rent but that does not quite make the debt payments.

    So, I have a retirement account, an investment basket and a rental property. I am a 46 year old un-married woman with no kids and I am semi-retired. I hope to retire fully when I am 56.

  3. So far this year, I have been maxing out my 401k and Roth IRA contributions and investing an additional $1-2k each month into a non-tax-advantaged investment account. I have a mix of mutual funds including a total stock market fund, bond fund, international stock fund, and a REIT ETF. I keep a small portion of this portfolio in cash as well. Since I am young, I am shooting for about 20% bonds and 80% everything else.

    I just recently decided to put this additional investing on pause to build up my emergency fund from $11k (~5 months worth of expenses) to $20k or $25k. When I reach that goal, I will go back to investing.

    I use a Google doc spreadsheet to track the balance of all investments in my brokerage account, and the current allocation percentage versus target allocation for each respective investment. Each addition is used to help bring my allocation as close to balanced as possible.

    • What firm/group/company do you use for this taxable investing….my wife and and I are in similar place with Ninja and thinking about taxable investing for some NOW income.

      • Randall sounds like a Boglehead with that portfolio.

        If you are an index fund fan (like me and Randall) then Vanguard is the way to go. Vanguard is where I invest all my non-employer investments.

      • I use Charles Schwab. They have a lot of similar fund offerings to Vanguard with lower initial contribution requirements (usually $100). I think they’re a good option for someone starting out. Plus their Investor Checking account is pretty nice – they reimburse ATM fees and don’t charge foreign transaction fees.

        • I use TDAmeritrade for my ETFs. Many Vanguard (and other) ETFs available commission free on the site.

    • Randall, you are who I want to be in about 2 years. This is what I’m working toward. Getting there…

      • Wow, thanks Angela! It’s been a long slog through getting out of debt, building an emergency fund, and cutting expenses (especially housing) to finally get to where I can save a significant amount towards an early retirement. And it’s a battle every paycheck to invest the money, and not splurge on whatever frivolous purchase is next on my list (Ray Bans!).

  4. In addition to our 401k’s and Roth’s, we have three mid-term accounts. One is with Scotttrade, one a stock purchase plan account with Smith Barney, and a SERP account through my wife’s work.

  5. First Off – Happy Birthday!

    Secondly – 40 is not old and wrinkly, my friend. As someone who just turned 40, I can tell you that it is still very smooth….

    I am teeing up for short term investments very soon. I have been speaking with a close friend about this, as he is into high risk investments, and I have a much more conservative approach. Hearing his viewpoint has helped a lot. As for what I am going to invest in for the short term, it is still way too early to tell.

  6. Hi Ninja,
    If I were you, I would invest in a mutual fund instead of picking individual stocks. Picking individual stocks are much like picking numbers on the roulette wheel. Picking an individual stock is like putting everything on black 15, while mutual funds are like putting your money on black. You have a much greater chance of winning with black than you do with black 15.

    When investing in a mutual fund you can select different types of industries that will best fit your risk tolerance. Based on what you said above, I would gather that your risk tolerance is rather low. Here are some lower risk mutual funds that I found after a really quick search on Fidelity mutual fund research tool.

    BAICX – BlackRock Multi-Asset Income Portfolio Investor A Shares – 1 yr return 10.45%; 5 year return 6.67%
    Front Load -$50

    JNBAX – JPMorgan Income Builder Fund Class A Shares – 1 yr return 11.8%; 5 year return 7.75%
    Front Load $25

    For comparison the 10 year treasury issued 7/16/13 is 2.55% – no-load

    Please, always do your own research before investing and always watch the fees that are associated with mutual funds. The funds listed above are low fees and low risk; however, they are front loaded (you have to pay a fee to invest in these up front.) With more research I am sure you can find no-load mutual funds. I should also say that these funds are NTF (No Transaction Fee) which means you would just have to pay the load to invest – no broker fees.

    Hope that helps.

  7. First time poster, just got through reading your archives. Happy birthday!

    Besides my tax-advantaged retirement accounts (TSP and Roth IRA), I am investing $300/month in a new car fund, $300/month for my next house downpayment, $100/month in individual stocks, and $720/month in a non-tax-advantaged account to be used during early retirement. The car and house downpayment funds were just moved from savings accounts to investment accounts a few weeks ago. I was tired of earning only a couple of bucks each month in interest, and since my Efund has enough in savings to cover a new car if it became necessary, I am willing to take some risk and the longer timeline associated with getting the money out of investments. So far it’s paid off – I’ve made $858 dollars in the last three weeks! Yes, yes, I am well aware that I could lose every penny of that money, but I left over $60k in my savings accounts so like I said I’m willing to take the risk.

  8. We have $3K in my company stock through my ESPP program. Once we buy a house, we will have more money to invest outside of retirement accounts. Although, I think we want to look at acquiring properties and rent them out. We’ll see! I love Vanguard for mutual and index funds!

  9. We max out our 401k’s and make too much to contribute to a IRA. We put about $5k/month into dividend stocks that pay between 4-6%. I select them from and other dividend blogs. We use

    • I completely agree with Dillon (although from my blog name, I’m obviously biased). It is time consuming to pick individual stocks but if you get a good range (20-30) of stable blue chips that have constantly paid/increased their dividends you can build a solid passive income stream while protecting your principal.

  10. Happy birthday! I’m a little more than a month older than you 🙂

    We have some savings to recoup after some big purchases, but hopefully by the end of the year we’ll be all set with our savings account after that. At that point, I plan to start investing in regular taxable investments beyond the retirement accounts.

  11. We have some non-retirement investments but we aren’t actively adding to them. Once I think that our retirement savings rate is adequate and we buy a house we will definitely look into investing outside of retirement accounts for “dream” goals or earlier flexibility to stop working. But I think taking care of retirement basics needs to come first, and I’m not convinced we’re there yet as we don’t even max out our IRAs (and have no 401(k)s).

  12. Happy Birthday! We share a birthday! July 16th is one awesome day 🙂

    We currently do not have enough discretionary income to go round for non-retirement investments at this moment, between mandatory pension contribution, retirement savings plans and RESP (Canadian education fund) for our kids. But it doesn’t mean that we haven’t been thinking about it and want to get to some kind of comfort at that time.

    Good article – short and sweet, but has forced me to ponder…

  13. I have way more invested in taxable accounts than I do in my retirement accounts. This is probably due to the fact I have been investing in the stock market (my dad and grandpa did the transactions in my custodial account) since I was a wee lad. I mostly do this because my 401k choices are good, but not great and once I max out my ROTH there isn’t much else to do besides investing in a taxable account.

    Also Happy Birthday!

  14. Leslie and I don’t actually invest in retirement accounts at all. We mostly use our incomes right now to pay off our debts and invest in our online business we’re getting off the ground. We’d rather invest in something like a business, because we can control how much money we make more-so than if we were to just invest in stocks or retirement accounts (which rely on the stock market).

  15. Happy birthday Ninja! I turn 27 in 10 days. I make sure to max out my 401k first, and then I add money during bonus season (end of year) to my taxable investing account with Vanguard. I mostly invest in Vanguard ETFs to get a low-cost and diverse global portfolio. That being said, I still have some money in some single stocks (GOOG, AAPL, GS, V, WMT, PG, JNJ, MO, MRK, PFE, VZ. etc).

  16. I’m investing in taxable accounts, mainly for the same reason as you, Ninja — I’d like to be able to access that money for early retirement if I choose to go that route, which you can’t do with 401ks or IRAs until you’re 59.5.

    That being said, I’m also being pulled in a lot of different directions in my financial goals right now, so while I’m contributing to the taxable accounts (which are invested with Vanguard in their VTI stock market ETF, primarily), it’s a relatively small amount ($400 a month), while I’m focusing more on some other, bigger goals (maxing out the 401k; saving for a down payment; finishing off paying some zero-percent interest credit cards; paying off student loans). The plan right now is to finish paying off the credit cards (should be done by November), diverting all the money that was going towards that towards the down payment, max the 401k starting in January 2014, and then split any money left over at the end of the month between additional for the down payment, the taxable account, and paying extra on student loans. (I budget pretty well, so at the end of any month anything left over $500 in my checking account gets put to other uses). Hopefully a year-end bonus (which I’m on pace for and should receive) will be a big help in all of these goals…..

  17. Not a typical poster, but this is a good topic. After contributing enough for full match to 401k and max to Roth IRA, I systematically invest via a taxable brokerage account. I’m a loyal Fidelity customer (expense ratios are just as low as Vanguard) and invest in the no-load ishares index ETF’s that they offer. My strategy for investing is based on dollar value averaging (different than dollar cost averaging). This forces a larger investment when the market is down and a smaller invest (or theoretically selling) when the market is high. I was looking for a way to remove all emotion from investing and this is the best way I have found. Returns are historically better than dollar cost averaging but cannot necessarily be compared to investing a lump sum all at once. For reference, my goal allocation is 70% IVV, 10% IEFA, 10% IJR, 10% IJH. All are no-load through Fidelity with low expense ratios and this allocation provides the diversity I was looking for.

  18. We max our our 401k’s and invest $6K in taxable accounts each month, though we probably need to increase that because we have too much cash on hand.

    On another note, I don’t understand your statement…that you’d rather have $1M and $2M in retirement accounts than $5M. You’d rather have $3M than $5M? I think I’m missing something 🙂

  19. My wife and I are in very stable careers (RN & Teacher), but we still invest in our retirement. In fact, we believe in multiple income streams. We will have Social Security, pension, IRA, Roth IRA and brokerage accounts. In addition, I can earn additional income through blogging and other means. This provides confidence that I will have a comfortable retirement.

  20. Happy Birthday!

    To answer your question, I think it depends upon your financial goals. My is not to be rich or get every penny I can, its just to be smart with my money so that money does not rule my life.

  21. Happy Birthday! I am a cancer too. We rock.

    I max out my 401k. My wife is a teacher and puts $100 a pay to her 403b at work. We (I?) stopped using the IRA since it does not offer tax advantages. We still use that money, though. It along with some other monies get placed into Index Funds, Stocks, and Lending Club. I have accounts set up with Fidelity and ING.

    Since we just had a little girl, we put aside $75 a week for her education. Every month $200 get automatically withdrawn and invested into 2 mutual funds.

  22. Great post Ninja! I have been wondering the same thing. It seems like there are some assumptions built up around 401ks and retirement: that you will work until you’re at least 60, and will be contributing to the 401k all along, and then by the time you retire, you will be able to take those distributions fee-free. And money from 40-60 would not be an issue because you are still working…?

    I am fine contributing to my 401k for as long as I am working, but I have been curious about calculators that would show you what your 401k would continue to gain if you were to, say, stop contributing at 50 because you went into early retirement, but did not want to touch until you are 60 obviously. I contribute only to the match, and will be investing all the rest of my spare money in penalty-free investments. I am not even so sure about Roth IRA for the early distribution penalties…

  23. I’m with you. I always shake my head at the people who say stuff along the lines of ‘I just maxed out my retirement and now I’m not sure what to do.’ I can’t figure out why you just don’t invest the rest in a regular account and call it good. Seems to never occur to many people though.

  24. I haven’t seen anyone mention this yet, but a SEPP plan may also be a good alternative if you want to use retirement funds before 59 and 1/2. You can withdraw from an IRA (or rollover IRA from your 401k) by initiating a program of Substantially Equal Periodic Payments. The catch is you have to continue taking these distributions for 5 years or until you reach 59 and 1/2, whichever is longer. But with some careful planning, this can really help make early retirement a reality.

    • Good point. I was just thinking the same thing before I saw your comment. More info:

      The other question for me is whether it’s more advantageous to put after-tax money into investments that are then taxed at the lower capital gains rate, or to put pre-tax money into tax-deferred investments that are then taxed at ordinary income rates. Thoughts, anyone?

      • That depends on whether you think the long-term capital gain tax rate will remain low. Personally, I think they will end up being taxed at ordinary income levels in the near future. The majority of people already feel this rate gives preferential treatment to the rich, and it would be an easy revenue booster for the government. So if the rates rise to ordinary levels, pre-tax is better.

        Example: You want to invest $100. If you invest after tax (assuming a 25% tax rate for simplicity purposes) that leaves $75 to be invested. If we further assume a 10% appreciation by the time you want to cash out, that $75 becomes $82.50. If capital gains are now taxed at 25%, you will be taxed $1.87 on your gain, leaving you $80.63.

        If you invest that same $100 pre-tax, assuming 10% appreciation again, your investment is now $110. The 25% tax is $27.50 on the whole draw, which leaves you $82.50. More money than the after-tax investment.

  25. Randall nailed part of what I was thinking to write. The other piece is that if you leave a company at age 55 or older, you can tap the 401(k) with no penalty.

    The Roth IRA also gives you a middle ground – you and Girl Ninja can deposit $11K/yr total and the amount deposited can always be withdrawn, tax and penalty free.

  26. The overwhelming majority of mine is in retirement accounts, but I have about $1,500 in a taxable account at Lending Club.

  27. We are saving a lot in tax-deferred retirement; a good deal in non-tax deferred Roth IRAs; a smaller, but still significant amount in non-retirement investments; and a much smaller amount in our Emergency Fund. We save a lot and have dreams of saving even more in the hope of retiring early but comfortably, a la Mr. Money Mustache.

    • That reminds me, I am also planning to stop contributing to my 401k in 4 years, at age 32, and divert all of that money to my taxable investments. At that point, if I leave the balance alone until I reach age 60 (28 years of growth), it should grow to be about $650,000 in today’s dollars. At a 4% withdrawal rate, that will provide an income of $28,000. When combined with my Roth IRA, taxable investments, Social Security, and whatever other income I earn in early retirement, that should provide plenty for a comfortable lifestyle.

      • Do not stop contributing to your 401k if your company matches. Even if they match 2%, make sure to do at least that in order to take advantage of the free money. The years of growth and compound interest are very heavily in your favor.

  28. […] How many of you invest outside of retirement? Ninja asks this at his site Punch Debt in the Face. Once you’ve saved up that emergency fund and are handling your budget just fine, are you saving only in the retirement account, or other accounts as well? […]

  29. While I think it is important to invest for retirement, you want to be enjoying life now too, and investing for that helps. I read a stat years ago that if you have a class of 100 18yo, by 65, 35% of them will be dead. I have a neighbour who is dying at age 40 and they need the money NOW, they need to be making the most of things NOW.
    On a non death note, you may require the money for a renovation, or travel, or children, or you might want to return to study. It makes sense to have both investments, to get the best out of your life.

  30. I didn’t read the comments but I feel like you do which is why I am working on my dividend investment portfolio outside of any qualified/retirement accounts. Paying a few dollars in taxes now for another income stream way before retirement if I want it.

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