A couple of things here.... So I have a bit of mia culpa to my original post.
He is looking at
"regular" savings... so really a liquid place to put some money that he may need to use. To me -- that is different than "investing" or "playing in the stock market". I went back to re-read his question - and kinda went OOPS...
OKAY -- so even I keep cash (inside my Schwab account) that earns NOTHING... it just makes me feel good and I'm okay with that. BECAUSE the bulk of my dough is making me money. So to the OP'r - you're doing really really well with your RETIREMENT accounts! Kudos to you!
With your ordinary savings -- just figure out what makes you happy to have some emergency cash available. Hold that right where it is. Then take my advice and invest the excess in some - even one - dividend paying big name big cap stock. BTW -- that is NOT "playing" in the stock market. That is BRILLIANT investing.
Here's why I DO NOT LIKE mutual funds - You're paying them a fee to manage your money. When you break down a mutual fund... you'll find many are overlap invested. If you only have $2500 to invest -- then put that in McDonals - or Coke - or Kinder Morgan Partners - or Chevron.... your returns OVER TIME will be far better. It doesn't take any effort or brains to manage this. Next time you have $2500 - buy another good stock etc. In 10 years (saving just $2500 per year) you'll have your own "mutual fund" with NO fees. If you now have $100K in mutual funds - you're paying about 1 1/2% in fees... and over time that is compounded and affects your returns. Take you're $100K and buy 20 ($5K each) big name dividend payers - and pay NO FEES and you have the same exact investment. On $100K you should be able to "make" $5K a year in dividends invested conservatively - but you should also have CAPITAL GROWTH - so in 7 or 8 years - you should have $200K and be collecting $10K in dividends and so on. Remember that at retirement - you don't just suddenly withdraw all your money! You should live another 25 or 30 years... and that money should still be having capital appreciation! And the dividends should be GROWING in PERCENTAGE PAID. Example - McDonalds paid .38 a quarter in 2008.... they now pay .61 per quarter.... so the dividend is beating inflation and your retirement INCOME is growing without you having to do a dang thing!
NOW --- ABOUT "TIME" --- If you are 21 years old - and you save $2000 each year for 10 years and then you stop and do nothing from then 'til you retire -- you will have near 1 million dollars.
Money doubles about every 7 years -- so here's an example for time. First number is @ AGE
@ 21 $2000 - @ 28 $4000 - @ 35 $8000 -@ 42 $16,000 - @ 49 $32,000 - @ 56 $68,000 - @ 63 $136,000
That is 42 years -- so 21 plus 42 - is 63 (retirement age)... NOTE the last "double". That is HUGE!
IF you start this saving at 31 and save $2000 dollars until you retire - you'll have about HALF of that. So example:
@31 - $2000 @38 - $4000 @45 - $8,000 @52 - $16,000 @59 - $32,000
So you start to see how far behind you are with "LATE" savings/Investing?
Can you tell I like this stuff??
