Here's an email I recently received from a reader:
My spouse and I are 38 yrs old and make about $250K-300K per year. We are very, very fortunate! Have two kids under age 5.
Here is our situation:
- We max out 401(k)s (currently have about $700K in non-taxable savings for retirement)
- Can't fund a Roth (although we have about $40K in them from when we could)
- We save about $5K a year in 529s amongst both kids (I fund the 529s enough to take full advantage of the state tax credit for IN)
- Our only debt is a $285K mortgage at 4.5% for 30 years
- We have a brokerage account with $45K invested amongst 3 long term stock holdings (KO, GE, and AAPL)
- We have $255K sitting in a savings account- you could call this our emergency fund, but it's getting a little to big. We both have very stable jobs in the health-care industry, so one year of funds is a little much I think.
We have been very fortunate and diligent to amass this amount of savings. I would like some advice on what to do with the $255K in savings that we have. My risk tolerance could be considered moderate, but I'm reluctant right now to put money into stocks with the market at 5 year highs (though I have made about $10K trading with some of this money over the past two years). Bonds make me a little nervous right now with interest rates left to go nowhere but up.
The savings account earns a measly 0.4%. If we were closer to the kids going to college or retirement, then I wouldn't be too worried- but we have a lot of time for this money to grow before we need it!
Any ideas out there on how your readers would put this money to work (if at all) if they were in our situation?
What's your advice for him?