First Gen American asks:
Once you’ve hit all your major savings milestones (paying off the house, no debt, etc), where do you put money then and why?
Disclaimer: We are not financial planners. Please consult with a fee-only certified financial planner and/or do your own research before making important money decisions.
We’re still working on the answer to this question.
Obviously you will want to max out your retirement savings in any way that you can. That means maxing out what you can save at work, putting money into backdoor Roth IRAs, HSAs, self-employment plans if you’re eligible etc. Retirement vehicles are great because you’re saving tax money either now or later on them. Also, if you’re eligible for college financial aid, schools won’t look at what is hidden in retirement accounts like they do with regular accounts.
You may want to either beef up or cut down on your emergency fund depending on how you feel about drawing from taxable stocks during an emergency.
Speaking of college saving, 529 plans are a good place to put money if you have kids who are likely to need post-secondary training. How much to put in is less certain, though right now I’ve been thinking if either of our kids have kids maybe a 529 plan isn’t such a bad thing to pass down to the next generation if we have extra money leftover. It seems like a tax loophole…
After that there’s spending and saving in taxable funds. Some people buy real estate. Some people buy municipal bonds (since these aren’t taxed). Some people speculate in risky markets for fun. Some people set up donor advised funds or just give extra to charity directly.
Here are some posts where we’ve covered similar topics.
Where should a teenager put extra money
Saving for long-term priorities.
Grumpy Nation: Where does extra money go once you’re debt free?