Hands-off smaller investment advice.

[180ls1]

Put the max(7k) into a roth. There's no reason not to do this every year. Tax free growth.
If you make too much for a roth just do it backdoor.

Assuming you're an employee of your business you should be able to also set up a 401k for yourself.

Tax advantaged money goes farther than money you pay extra taxes on.

Even if you sell a business 20 years from now for 20mil, idk why you wouldnt want to minimize the taxes you pay every year.

It really depends. Business and Real Estate returns can absolutely crush the stock/bond market when it comes to returns and are also tax favorable. Saying there is "no reason" is a bit short sighted.

There are also restrictions around putting money into retirement accounts that may not be favorable when it comes to getting it back out in case of an emergency.

 

[SDHNTR]

If this IS your emergency fund do not expose it to market risk. That totally defeats the purpose of an emergency fund.

 

[BBob]

There are also restrictions around putting money into retirement accounts that may not be favorable when it comes to getting it back out in case of an emergency.

Exactly and the wrong avenue for him since he says it's just that, rainy day $$$

It doesn't really do much & is basically just a rainy day/emergency/bail fund.

 

[MuleyFever]

I agree with SDHNTR above. Open a high yield saving account or a Fidelity account. I put my extra money that I want quick access to in a Fidelity brokerage account and it earns interest at almost the same rate as what most CDs offer.

 

[Broadhead]

That is no joke. Honestly rentals aren't worth it to me (been down that road), but what is worth it is lending your money with an origination fee ($1200-$1800) and scheduled monthly payments, and short terms, at 7-12% interest through a title company with their home as collateral.

Generally, this is what development companies do (in my area at least). Just some food for thought, it's not for everyone.

Not what the OP needs to be doing but I would be interested to hear how you get into this type of lending.

 

[MountainTracker]

13 posts and no NFT or Crypto suggestions. I'm shocked. Equities (SP500) would also be too spicy for this use case. Emergency funds should be stable and liquid.

In addition to HYSA, Money market and related funds you may want to look at a rolling CD ladder. All of these more or less keep pace with inflation, not so much actually grow your $$$. Be weary of anything that promises stability and high returns. Keep doubling down on the business, that's where you'll really make the $$$.

Nope I wouldn’t put an emergency fund into an etf or crypto. Emergency funds are meant to be liquid. Some good suggestions for that have been made while still gaining a little.


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[z987k]

It really depends. Business and Real Estate returns can absolutely crush the stock/bond market when it comes to returns and are also tax favorable. Saying there is "no reason" is a bit short sighted.

There are also restrictions around putting money into retirement accounts that may not be favorable when it comes to getting it back out in case of an emergency.

There's no reason to not fund a Roth. Its not enough money to do anything in real estate.

 

[SloppyJ]

There's no reason to not fund a Roth. Its not enough money to do anything in real estate.

Except he said he needed access to it. You're not wrong but this is the wrong application.

Go shop some CDs and look at the HYSAs. I have a capital one HYSA and it's around 4%. Easy to move money around and it's better than some BS local bank savings return rate.

 

[HairyScandinavian]

I would invest that into a couple new rifle combos.

 

[ozyclint]

Gold. You're welcome.

 

[180ls1]

Except he said he needed access to it. You're not wrong but this is the wrong application.

Go shop some CDs and look at the HYSAs. I have a capital one HYSA and it's around 4%. Easy to move money around and it's better than some BS local bank savings return rate.

Yeah, I would argue the application as well.

If his EF is only $20K, his business and real estate is probably "small" leading me to believe it very well could move the needle.

Knowing money invested in personal/active income/investments generally outperforms public investments, it is absolutely worth looking close to home first for a higher rate of return (or other useful metrics) before entering the public market with it.

 

[hunt1up]

I keep my emergency fund money in an E-trade savings account. Pays 4% and you can use it whenever you want. Sure it's not an "investment" but it's easy and it's something. You can set it up in 10 minutes.

 

[Hunter26]

I think several people have said it. Going on the premise this is an emergency fund then put it in a high yielding savings and let it ride. You can then transfer any gains to an investment account if desired. If you believe in having an emergency fund that is liquid it is the easy button and not much out there to beat it from what I see.

 

[180ls1]

Personally I would put that money into a good ETF like VGT or something similar. Not to many emergencies that you wouldn't be able to wait 2 days for a stock sale to clear.

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$VOO
$VTI
$VGT

These are VERY spicy suggestions.

OP - Keep in mind when tech crashed (~VGT) it took nearly 2 decades to get back to where it was. Interesting to see two people suggesting that.

 

[ODB]

VTSAX?

 

[MountainTracker]

Gold. You're welcome.

Can’t argue with you on that


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[z987k]

Except he said he needed access to it. You're not wrong but this is the wrong application.

Go shop some CDs and look at the HYSAs. I have a capital one HYSA and it's around 4%. Easy to move money around and it's better than some BS local bank savings return rate.

You can take the contributions out of the roth at any time. No penalties. He can have it invested in a 4+% high yield savings but get the interest tax free.
If he never has to use it, this way he didnt give up getting 7k a year into a tax advantaged account. When he has more flexibility he can move it from high yield to an etf or something.
You can actually invest Roths into about anything you want. Including real estate.

 

[WiscoHoundsman]

I use Fidelity for that purpose. You can set up a cash management account with them, and earn enough to cover inflation (currently 4%) with their default SPAXX money market account. Funds are readily available.

I will third this. It’s easy and money transfers from fidelity to my bank in 1-2 days if needed. Currently it’s like 3.84%. I stoped using our banks savings account as it was at 0.2% interest or something like that.

 

[menhaden_man]

I keep cash in CDs (4.3% at Bank Ozk) and some in SNOXX (4ish) - neither really keeping up with inflation but liquid for when we need it.

Doesn’t sound like you want an IRA but as a small biz owner you can set up a SEP and deduct it as a business expense. I think you can pull money if needed but have to pony up taxes and maybe some fees in the process.

 

[CorbLand]

Option 1. Open an account t with Capital One and put it all in their high yield savings account. Interest rate will fluctuate based on the Fed rate but it’s far better than a standard savings. Never look at it again.

Option 2. Open a Fidelity brokerage and put it all in SPAXX. Like the HYSA, but with ever so slightly better interest. Never look at it again.

Option 3. Open a Fidelity brokerage and buy VOO. Set dividend reinvestment and never look at it again.

Option 4. Open Fidelity Roth IRA and put max amount in every year until all 20K is in there. Buy VOO, set dividend reinvestment and never look at it again. Won’t pay taxes on it when you take it out at retirement age.

Option 5. Open Fidelity brokerage and use it to buy TBills. They are easy, safe and no state income taxes, if applicable. Short, mid or long term options. Long term option you could forget about it.

If you need help with any of the options, I can walk you through it.

Edit to add. Just saw this in an emergency fund. In that case, SPAXX, HYSA or short term TBills is the only thing I would do with it.