Stock Market Thread

[WRXtranceformed]

Financial gurus of MM - assuming no debt, a healthy emergency fund, and maxed out 401k/IRA contributions - where would you be investing your extra cash outside of individual stocks?

I wouldn't consider myself a guru but I have a healthy portfolio put together through my brother (was ING, now Merrill FA) outside of the matching Roth 401k through work. One strong investment to consider if you have a good chunk of disposable income to play with is a ULP investment grade insurance policy. These generally get flak from some of the investment "gurus" out there because like any investment plan component they are not for everyone. They are expensive and the initial fees to the broker are significant.

That being said, the huge benefit to the plan (I have through ING) is that it is a tax haven. It is tied to three major international indexes (S&P, Nippon and one other) and it reevaluates the policy every 5 years by looking at which index performed the strongest. It takes the premium you have put in during that timeframe and dumps the equivalent growth income you would have earned investing in that index into your cash value. Depending on how much you invest, by the time you hit age 50 you can start borrowing from the cash value of your policy tax free each year for the rest of your life...that amount ranges from like $79,000 to $150,000. The longer you wait to start borrowing, the more you can take out without tax penalty. If you die, your beneficiary receives the face value of the policy plus any cash value that has accrued. For me that is important because as of right now my future wife will be a dependant.

As far as returns, the long term average has been ridiculous, like over 21%. Like anything else it is an important part of a balanced policy and is not for everyone. The fact that it provides guaranteed tax free income when you retire is the real benefit, the face value of the policy is just a bonus. The goal was to set up most of my retirement income to be tax free (Uncle Sam loves me right now) to help combat inflation. The Roth 401k and this plan should help, although I have some money in mutual funds as well.

As far as cash on hand, we keep enough to keep me us out of an emergency but I don't like to have a lot of cash sitting around earning 1%.