I was 0651. As someone above said, I am not against some stock market exposure, just against a taxable high-fee stock account that is likely to underperform the market as a whole ( I am assuming that it is an actively managed account). So, good for you that you have an emergency fund. Next up for me would be topping off my 401K to the maximum (which should nearly all be invested in low-cost stock funds, assuming you won't need it for many years). The remainder I would save as cash for a house down payment (money market account, CD or MM mutual fund), or if it makes you happier, split it and use some to open a 529 (again, this would be stock market exposure).

Remember, these are not huge amounts, and the return on investment is not huge. So, if one option makes you more comfortable, choose that.

Anonymous wrote:I have a lot of extra cash coming this month $25K and I'm trying to decide what to do with it. I'm finally in a place that I do need to think about maxing out my 401K contributions, I don't have a 529 for my child. I also don't own a home. A friend recommended some Merrill Lynch stock accounts, but minimum contributions are 20K.

I need to reduce my tax liabilities (positive of 529), but also desire to save aggressively for retirement and eventually a home. Thoughts?

OP, given that you already have an emergency fund, either save for a house or max out your tax-advantaged retirement funds, or both. Definitely do not invest in a taxable account. That's the last thing you do once everything else is maxed out.

529s seem very popular on DCUM (classic doctor/lawyer profile) but are often a waste of money and certainly far down the list below buying a house and maxing out any tax-advantaged retirement funds.

go talk to a finacial planner

you can borrow for your kids education if you are not too keen on that idea. you can;t borrow for retirement, so you might want to set up some other retriement accounts. Jsut because you max out your 401k doesn;t mean you will have enough.

here's a good order to consider:

http://www.daveramsey.com/new/baby-steps/

Are you paying interest on anything at all? If, for example, you are paying 5% on a car note, using the lump sum to pay it off provides the equivalent return of a risk-free 5% on the same amount.

It's not a bad idea to buy a stock fund. It's a bad idea to buy a Merril Lynch stock fund in a taxable account when you're not already maxing out your tax sheltered space.

Max out your 401k for the year, or start a Roth IRA at a low cost provider like Fidelity or Vanguard.

If you absolutely must put it into a taxable account, at least make sure it's done in a tax efficient way. Personally, I would purchase 10k worth of I Bonds and 15k worth of VTSAX.

Buy yourself some new bling.

Anonymous wrote:Set it aside as an emergency fund. When that is large enough, max out 401 K and start saving for house DP (if you want to own a house). Then worry about the 529. DO NOT buy the stock fund.

Could you explain why you think it's a bad idea to but a stock fund?

I definitely want to save for a house, but it's many years away. My money market makes 1% so it's not helping me save at all.

I should have said I already have an emergency fund. Also it's $25K after taxes.

Is this a bonus from work? If so, expect around a third to be withheld for taxes. Then:

$17,500 into the 401(k) -- that's the best option for reducing tax liability on the $25,000.

Start a 529 with $1,000 and a commitment to adding a few hundred more every month.

Put the rest into an emergency fund.

Set it aside as an emergency fund. When that is large enough, max out 401 K and start saving for house DP (if you want to own a house). Then worry about the 529. DO NOT buy the stock fund.

I have a lot of extra cash coming this month $25K and I'm trying to decide what to do with it. I'm finally in a place that I do need to think about maxing out my 401K contributions, I don't have a 529 for my child. I also don't own a home. A friend recommended some Merrill Lynch stock accounts, but minimum contributions are 20K.

I need to reduce my tax liabilities (positive of 529), but also desire to save aggressively for retirement and eventually a home. Thoughts?