Mark: Sorry, I am not familiar with transferwise.com. I will add it to my list of interesting new websites.
Mark, I'm not familiar with it, either.
Mark, me either but it looks very interesting and their are a lot of good reviews online. If you do use it, start with a small amount to see how it goes. Thanks for the heads up!
Hal, TIPS only work well if both interest rates AND inflation rise at the same time. If interest rates start to climb before inflation, TIPS can get hit pretty hard.
Hal, TIPS have had some disappointing performance in the past. And they have long maturity dates. In rising interest rate environments this means they can get slammed more than shorter term bonds. We still use it but only in VERY small amounts.
A well known TIPs SEC yield is -.29% as of 6/4/2014 and its one year return was -6.29%. As a part of a diversified portfolio you may want to hold Tips, but not just as the one and only fund.
Hal: We have recently changed our portfolio design to include a new DFA fund - DFAIX - instead of a stand alone TIPS strategy. This is a new fund that uses a more sophisticated inflation swap strategy coupled with corporate fixed income.
Sarah, I wouldn't borrow any more than you have to on student loans so that means you shouldn't borrow enough to pay off credit card debt. That student loan could hang over your head for a long time. Education is an investment. Check and see what the difference in your earnings is likely to be when you finish the program. The difference should be more than enough to pay for the education costs while allowing you to save and or spend more.
Sarah, I agree with Bobbie on that. Don't add any more to ed loans than you have to. And remember, when you're in an MBA program you are investing in your future; just not in a 401k. I'd focus on getting that done in the fastest and least expensive way possible.
And, if you can avoid it, don't put another penny on that credit card tab. $12K is a lot at your age.
Yes, debt is easy to get into and tough to get out of.
Sarah, I don't mean to sound harsh. You are taking steps to make your financial life better. That's a good thing.
Sarah: Find an employer that offers tuition reimbursement.
Sarah, you bring up a good point. When I work with clients and everything looks like it's on track, I always ask about family who might someday need help.
KittyMomma. Great point! Time does work wonders on investment returns.
AppleZ: Parental assets are treated at the 5.64% rate. Thus 529 accounts and brokerage accounts are in the same grouping. The 529 will not be depleted by the colleges, but instead, it is used in determining the student's "Expected Family Contribution (EFC)." A 529 plan is still more beneficial than an UTMA or other account in terms of determining the EFC, which is deemed the students and a higher amount of which is used for the EFC calculations.
Glad we could help, Sarah.
Brian: Wow, sounds like you guys are off to a great start!
Brian, congratulations on having so much in your hsa. Does it have investment options or just the fixed savings account?
Brian: You should ADD a JOINT brokerage account to the mix of investment accounts.
Brian, with a young child I always want to know if you have sufficient insurance to protect your family, and if you've established estate planning documents (will, trust, etc.)
Brian, I agree with Peter, it's nice to have money outside of retirement/hsa accounts. Also, did you say that 15% to the 401k was counting the employer match? How much is that?
Brian: If you earmark a portion of your discretionary cash flow to a taxable account, that account could be used for multiple goals in the future. Besides, every $1 distributed from your retirement acccounts is subject to ordinary income tax at retirement.
Brian, I would suggest that you get a handle on how much you need to set aside for education fund. And it would be nice to know the same for your retirement needs as well. I don't know how long you've been saving for retirement or what your spending looks like.
Delia: Good point! Some portion of discretionary cash flow should be used for risk management (e.g. life and disability insurance coverage).
Brian: Peter makes a good suggestion. Withdrawals from qualified plans make a big hit in taxes at retirement. The taxable brokerage account would allow you to take advantage of the favorable taxable gain rates.
Brian, I am SO proud of you! If your home is now in the trust be sure to add it as an additional insured to your homeowner's policy. There's no cost and it protects you in case something happens to the both of you.
Brian, I love to invest inside HSAs...they're great long-term investment accounts that act like Roth IRAs for medical expenses down the line.