Ask Terry Questions Work 401k maxed out, Roth IRA maxed out, extra payments on home mortgage – what next?

Work 401k maxed out, Roth IRA maxed out, extra payments on home mortgage – what next?

By Terry Savage on September 06, 2018 | Chicken Money

Hi Terry,
I am a big fan of yours (and my family). I am 26 years old and strive to set myself up the best I can financially (instilled in us since we were little). I always max out my work 401k , roth IRA and I bought a condo in Chicago February 2017 and I have been making extra principal payments and already have my mortgage down to 26 years left (started at a 30 year mortgage).

I have a fairly normal job ($66k gross/yr) and a handful of little side jobs that I make a few extra grand with a year. I currently have $20k in “liquid cash” that is just sitting in my savings/checking accounts at chase and not growing.

I have a few EE Bonds and I am trying to decide what my other options are. In a five or so years I could see myself buying a car, so I am not sure I want to tie up too much money, but at the same time I hate that this money is not being invested to a better potential. What are your thoughts on EE Bonds, I Bonds, CDs or putting more money in the stock market? Or am I missing something?

Any suggestions and advice is greatly appreciated.

Terry Says

Wow, I’m impressed. First a word of warning: don’t let the people you are dating know about this skill! Marriage makes money disappear fastest — unless you find another “saver”!

I understand your desire to make this money work for you, but at your age you haven’t seen money disappear in a bear market. It’s truly frightening — even though it has always been wise to just keep investing on a regular basis. And it’s easier to stick to your plan of regular investments if you have some liquid, safe savings on the side. It doesn’t seem that way now, but you’ll thank me when things get crazy.

Currently, one of the best ways to set that money aside, highest yielding with complete safety, is in U.S. Treasury bills through Here’s a link to my recent article on how to buy them.

They are attractive now, because the rates banks are paying on CDs and money market funds are lagging the rates on Treasury securities. (The banks figure people won’t notice!) So write back when you have 25 percent as much in Treasury bills as you do in your combined retirement savings. Then it will be time to do something different.

PS I no longer recommend Series EE or I savings bonds because of the way interest rates are calculated on them.



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