Dealing w bonuses and how to be smart

[Anonymous]

My husband and I are finally moving into the post-grad school phase of our lives, both in the private sector, so we have BONUSES! (Which I'm still shocked about, we were both bartenders and non profiters and students until about about five minutes ago). We have shored up several things, including buying a house and dealing w an emergency fund. We want to take our bonuses this year--which according to dcum is not actually a lot, but about $20,000--and put it somewhere safe, but where it could grow, so not a normal savings account. So where should we put it? A CD? Invest it? How does one do that? For a lot of reasons we're just going to let this sit for about 18 months or so until we figure out the best way to use it (we might have a baby) but I want to be able to have access to it. What would you do?

[Anonymous]

I would probably stick it in a Vanguard mutual fund, since you want it to grow but still have access to it. Vanguard.com actually has lots of great information and different calculators and tools to help you decide which fund to choose, if you decide to go that route.

[Anonymous]

Don't let ANYONE fool you that 20K isn't a lot of money. That's HUGE! Congrats!

I wouldn't invest it if you're going to possibly need it soon. Call it your emergency fund and stick it somewhere like ING direct earning .75 percent. Stinks but at least you know it won't go down in value.

[Anonymous]

We use the Ally no penalty CD's for money we might want to access quickly. (New car, home repair/improvement)

[Anonymous]

This assumes your 401ks and IRAs are already maxed out. If not, those.

[Anonymous]

Anonymous wrote:My husband and I are finally moving into the post-grad school phase of our lives, both in the private sector, so we have BONUSES! (Which I'm still shocked about, we were both bartenders and non profiters and students until about about five minutes ago). We have shored up several things, including buying a house and dealing w an emergency fund. We want to take our bonuses this year--which according to dcum is not actually a lot, but about $20,000--and put it somewhere safe, but where it could grow, so not a normal savings account. So where should we put it? A CD? Invest it? How does one do that? For a lot of reasons we're just going to let this sit for about 18 months or so until we figure out the best way to use it (we might have a baby) but I want to be able to have access to it. What would you do?

Are these sign on bonuses? I ask because the tax implications / games you can play.

[Anonymous]

18 months is a pretty short term horizon. If it was 10+ years, I'd say put it in the market. If you have a strong expectation of having at least $20k in that account months from now, you'll need to take a lower risk, lower return path.

I'd put most in a short term bond fund and maybe some (20%?) in an S&P 500 index fund.

[HDMI1]

Anonymous wrote:18 months is a pretty short term horizon. If it was 10+ years, I'd say put it in the market. If you have a strong expectation of having at least $20k in that account months from now, you'll need to take a lower risk, lower return path.

I'd put most in a short term bond fund and maybe some (20%?) in an S&P 500 index fund.

had this been 18 months ago, I would have told you to buy tesla stock...and your 20k would have been well over 100k by now. but that ship has somewhat selled.... I would buy 5k in solarcity stock. I promise you it will double in two years. quote me. and with the remaining 15k, start a ladder CD

[Anonymous]

If you don't need the money to be immediately accessible (though don't want to lock it up in a retirement account), but prize safety over the returns from stock, and want something better than online savings, consider I Bonds.

Rates are now more than double the online savings rates, with lower early withdrawal fees than CD's. Tax deferred with no state taxes. Advantages if used for educational expenses. Would buy 10k now, 10 k after rates change in November.

You buy them at treasury direct.com

[Anonymous]

Anonymous wrote:If you don't need the money to be immediately accessible (though don't want to lock it up in a retirement account), but prize safety over the returns from stock, and want something better than online savings, consider I Bonds.

Rates are now more than double the online savings rates, with lower early withdrawal fees than CD's. Tax deferred with no state taxes. Advantages if used for educational expenses. Would buy 10k now, 10 k after rates change in November.

You buy them at treasury direct.com

You are young. Throw it in a vanguard age directed fund and let it grow. You can have the money in your hands in 48 hours if you need it.

[Anonymous]

HDMI1 wrote:

Anonymous wrote:18 months is a pretty short term horizon. If it was 10+ years, I'd say put it in the market. If you have a strong expectation of having at least $20k in that account months from now, you'll need to take a lower risk, lower return path.

I'd put most in a short term bond fund and maybe some (20%?) in an S&P 500 index fund.

had this been 18 months ago, I would have told you to buy tesla stock...and your 20k would have been well over 100k by now. but that ship has somewhat selled.... I would buy 5k in solarcity stock. I promise you it will double in two years. quote me. and with the remaining 15k, start a ladder CD

SCTY is up 16% today.

[Anonymous]

Anonymous wrote:

HDMI1 wrote:

Anonymous wrote:18 months is a pretty short term horizon. If it was 10+ years, I'd say put it in the market. If you have a strong expectation of having at least $20k in that account months from now, you'll need to take a lower risk, lower return path.

I'd put most in a short term bond fund and maybe some (20%?) in an S&P 500 index fund.

had this been 18 months ago, I would have told you to buy tesla stock...and your 20k would have been well over 100k by now. but that ship has somewhat selled.... I would buy 5k in solarcity stock. I promise you it will double in two years. quote me. and with the remaining 15k, start a ladder CD

SCTY is up 16% today.

Methinks PP may have been privy to some inside info...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

HDMI1 wrote:

Anonymous wrote:18 months is a pretty short term horizon. If it was 10+ years, I'd say put it in the market. If you have a strong expectation of having at least $20k in that account months from now, you'll need to take a lower risk, lower return path.

I'd put most in a short term bond fund and maybe some (20%?) in an S&P 500 index fund.

had this been 18 months ago, I would have told you to buy tesla stock...and your 20k would have been well over 100k by now. but that ship has somewhat selled.... I would buy 5k in solarcity stock. I promise you it will double in two years. quote me. and with the remaining 15k, start a ladder CD

SCTY is up 16% today.

Methinks PP may have been privy to some inside info...

I wish! I'm simply betting against the price of Oil.

[Anonymous]

OP here, I like the idea of doing something risky with some if it, just jumping into the market. This has been so helpful! Our plan is to just keel using our bonuses to invest. I get 10k in July and he gets his in dec, so having the two infusions to add will be helpful I think.

[Anonymous]

Anonymous wrote:OP here, I like the idea of doing something risky with some if it, just jumping into the market. This has been so helpful! Our plan is to just keel using our bonuses to invest. I get 10k in July and he gets his in dec, so having the two infusions to add will be helpful I think.

If you havent accepted the job yet, negotiate. $10k sign ons are small these days. Aim higher.