Investment Advice Needed

[Bamabuzzard]

The wife and I have recently paid off a vehicle and a few other things that were taking up monthly financial resources. Now that they are paid off, I would like to just invest that money rather than just let it sit in the bank account and ultimately waste it. We're both 49 years old and our work has a good retirement plan that we're already participating in.

I'd like to take this money and invest it (monthly) into something for the next 15 years to have another "nest egg" when we retire. I just don't know if it would best to start off in a growth fund, since I'm just starting it at basically age 50, then move it to a more conservative fund later on, or just go ahead and start it in a conservative fund seeing our age. I'm not an investment expert so I don't know the best strategy. I know several on here seem to be very good at investing and I'd like to know what y'all would do in my situation.

Any advice would be appreciated!

 

[4Q Basket Case]

Kudos for being 15 - 20 years away from retirement, and looking to invest (rather than spend) your newfound cash flow! Not many look at personal finance that way.

The maximum contribution to a 401k (or 503b) is $23,500, . When you turn 50 it goes to $31,000. At 60, it goes to $34,750. All those numbers escalate over time.

Point being, if you aren’t already contributing the legal maximum amounts to 401(k)s or similar, devote your newfound cash to that. If you are already at the legal max, contribute the leftover amounts to IRAs. Legal max there is currently $7,000 for those under 50, and $8,000 for those over 50.

If you legally max out both 401(k)s and IRAs, and still have spare cash left over, BamaNation knows far more than I do about “back door” IRAs.

If you’re looking for a specific investment recommendation: Generally speaking, at 49 years old, just buy into a low expense S&P index fund every single stinkin’ month. Don’t listen to the nightly news. Put cotton in your ears if necessary. Do that for 18 years and you and Mrs. Buzz will be comfortable for life.

If, however, you have personal circumstances that lead to a shorter-than-normal investment horizon, things change. Examples would be you have a special needs child who won’t be able to care for themselves. Or you know you’re going to be paying for care for an aging parent. Or you have an autistic sibling you’ll be subsidizing. Specifics are endless, but the bottom line is that you’ll be caring for someone other than yourselves.

In any of those circumstances, consult a pro.

You’re looking at this the right way at a good stage of life — while you still have time for the magic of compound returns over multiple business cycles to have full effect. Well done!