If you don’t have an emergency fund, I would put some or all of it into something like a money market account. It won’t grow very much, but it’s safe and is quick and easy to withdraw when needed.
Otherwise depends on your age and situation, but an index fund (S&P 500) is almost always the right choice. It’s flexible, doesn’t usually lock you in, and will generally do very well in the mid-to-long term. If we hit a recession you might get stuck holding the shares for several months to a few years. The last thing you want to do is panic sell in that situation.
If you have any debt, paying that down is a very smart move, especially if the debt is charging more interest than your investment can earn. Future you will thank you.
aubeynarf@lemmynsfw.com 4 weeks ago
pay off high interest debt
top off your emergency fund so you don’t run into expensive short-on-money situations
take care of deferred maintenance on your car or house that might turn into an expensive repair
If you have an employer sponsored 401k, increase the contribution amount to get 10k more tax free into it before the end of the year and use the $10k cash in hand for expenses.
Open a roth IRA and contribute the maximum amount you can (which may vary based on your income)
VT, VTI, and SPY are good broad-market funds with good historical growth.
PineRune@lemmy.world 4 weeks ago
I like these points. Preventing a future expense by paying less now is always worth it, if you can afford it.
BassTurd@lemmy.world 4 weeks ago
Being poor is expensive.
r_thndr@lemmy.dbzer0.com 4 weeks ago
That depends, how far in the future, how big of an expense, how much interest can you earn, and what’s inflation looking like?
If it’s more than a couple thousand dollars more than a couple years out, you could possibly make useful money with a high interest bearing account provided inflation is expected to be less than about 2/3 of the interest rate of the account.
Time IS money.
robocall@lemmy.world 4 weeks ago
1-4 are all taken care of. I need to learn more about a roth IRA and what an index fund is. I’m okay with letting $10K sit somewhere for 5-10 years, possibly longer like for retirement.
prayer@sh.itjust.works 4 weeks ago
Don’t rule out a Roth if you only want to save for 5-10 years. You’re allowed to withdraw the principal (initial 10K) at any time for no penalty/cost, so long as it’s recorded properly with the IRS when you withdraw it.
zerotozero@sh.itjust.works 4 weeks ago
Read up on Roth IRAs - your future self will thank you! You can open an account anywhere you’d like (Vanguard, Fidelity, Charles Schwab, etc). One thing I’ll mention though: the annual limit is 7K for 2024 (8K if you’re 50+), and you have to have at least that much in income to contribute (i.e., if you only had 5K income for 2024, then that’s your limit).
So, for 10K you’ll have to invest in 2024 and 2025. You also have until tax day to make contributions for the prior year.
friend_of_satan@lemmy.world 4 weeks ago
Second vote for VTI.
CrimeDad@lemmy.crimedad.work 4 weeks ago
I used to not have any doubts about a Roth, but I’ve been considering that maybe it’s a little too much like giving the government a free loan. Do you know if there’s a thorough comparison anywhere between a traditional and Roth IRA that takes into consideration the opportunity cost of paying tax on the contributions?
Zeeber@lemmy.zip 4 weeks ago
Compound interest will far outweigh paying taxes now for a Roth. Especially if you also have a 401k, the taxes in retirement will be potentially large based on the growth of the fund over decades. A Roth makes it so you pay nominal taxes now for potential large tax free growth later.
The exception would be if you think your income will decrease in your later working years, in which case a traditional IRA could make more sense. That however is a unique case. Generally it’s better to take advantage of a Roth if you can for tax free gains later.
NaibofTabr@infosec.pub 4 weeks ago
Here’s a useful comparison.
The biggest question is, do you think your tax percentage will be higher now, or higher in the future? If you think your income might increase later (placing you in a higher tax bracket), or that the government might increase your tax burden later, then it’s better to pay taxes now.
PriorityMotif@lemmy.world 4 weeks ago
If you qualify for the savers credit you should put $2k into retirement like a an IRA.