If you’ve learned anything about me over the last 18 months, it’s that I love to make a plan. In fact, I’ve considered legally changing my name to Planny McPlannerson, but then realized I would probably get beat up for having such a dorky name. As much as I love setting up game-plans, I have to admit the short to mid term investing gig scares the bajeezes out of me.
My financial game-plan thus far has been pretty simple…
- Make a decent salary
- Get married to a total babe that also makes a decent salary
- Direct 15% of gross income towards retirement
- Maintain reasonable expenses
- Don’t piss off previously mentioned wife
- Put most of our discretionary income in our savings account
As I’ve frequently mentioned, GN and I are putting 15% towards retirement. Could we up that amount if we wanted? Sure, probably around 40%, but I want to be careful not to over invest in my retirement funds. After all, what good would having $6,000,000 in IRA’s do for me, when I’m 45?
I need to start learning strategies for 10 and 20 year time horizons. I know a decent amount about Roth IRAs and 401ks, but I know diddly squat about bonds, short term treasury funds, and interpretive dancing (side note: am I the only person that thinks interpretive dancing is just code for “I suck at dancing, so I pretend I’m interpreting music”?).
There are two primary reasons I know nothing about short term investing…
1) I’ve had no need to learn about it since I’ve spent the majority of my PF journey digging out of debt and building up liquidity.
2) I’m lame.
I know money that will be used within 5-ish years should be kept somewhere safe (like a money market, high yield savings, or CD) and I know retirement contributions should be made through a Roth, 401K, or traditional IRA, but I honestly don’t know what the ‘standard’ protocol is when it comes to saving for 10-20 year time horizons.
Let’s pretend I had $20,000 in cash sitting in my savings account for a car purchase the wife and I plan to make in 2020. I find it hard to believe the 1% interest my “high yield” savings account pays is the best place for that money. There’s got to be a better option right?
This is where you, a much smarter person, can come in and help a Ninja out. Pretend you had $20,000 cash that you knew you wouldn’t need to use for another 10 or 15 years. What would you do with the money? Would you buy bonds? Would you go 50% stocks/50% cash? Would you stay all cash? What means would you take to try and maximize your return, while minimizing your exposure to risk? What investment strategies have solid 10-20 year track records?
I literally know nothing about this area of personal finance and would greatly appreciate any insight so I can go research each option and be less stupid.