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Today Money financial expert Farnoosh Torabi joined us for a live Web chat Wednesday to answer your questions.
Here’s one of her answers to questions from the live chat. (See below for the full Q&A and video of Farnoosh’s TV appearance this morning.)
Mat asked:
“I have between $50-$80K in cash and have no idea what to do with it. I'm in early 30s, own a home with wife and baby and need some advice on what to do with it.”
Farnoosh replied:
“Keep it in the bank! I understand you want to 'put it to work' but with a baby you will want the security of knowing that money is there and liquid. Of course, if that's more than you need in a rainy day account (and I suggest a 9-month rainy day reserve) … consider taking some and placing in a college savings account like a 529, or in long-term CDs where you can earn more than the standard .01% in a savings account.”
Here’s the full chat archive and Farnoosh’s TV appearance:
Personal finance experts Jean Chatzky, David Bach, and Farnoosh Torabi take on viewers' retirement-related money questions, including what percentage of your salary should be saved for retirement and how retirees can find part-time jobs.
If you have a question for our TODAY Money experts, submit it here.
To sign up for an e-mail reminder for our next chat, click here.
Leave a Comment:
Why put it in a Certificate of Depreciation? I have put my extra cash into physical silver for the past 5-6 years and have had around 90% return.
Not saying put it into metals but trusting the banks or government with your cash is foolish.
I read Farnoosh's Q&A sessions. IRS guidelines for catch-up contributions to retirement plans are age 50, not 60 as she stated (twice I believe).
FYI - IRS guidelines state the catch-up contribution into a retirement plan for investors is age 50 and older. This article mentions twice (I believe) the age is 60.
• age 50 or older during the calendar year in which
the catch-up contributions are made (even if you
become age 50 on December 31 of that year)
Putting it in a bank, even the 2%+ CD's in credit unions, will still tend to lose money against inflation. $10K per year can be put in I-series savings bonds that match the official rate of inflation and I agree you should put enough away so you have 9 months of mortgage payments plus living frugally. But I would put the excess in stocks that pay a 2%-6% dividend, are large companies that are the gorillas of their sectors, and that have a steady record of increased revenues and earnings over the past decade or so with perhaps a slight blip around 2000 and 2008. Such companies do not tend to crash as fast as the general market and even when the market went down 45% in 2008-9, companies like Coca Cola only lost 25% of their value.
Personally, in retirement I have more income than expenses. I put half the difference in savings splitting it about equally between such stocks and CDs and I-series bonds to cover future big expenses like new major appliance, new roof, new car, etc. The other half is my vacation money!
HORRIBLE ADVISE. I say open an account with ameritrade and put it in a stock called, 'BBEP'...very stable and it pays a great dividend.
Shocked and horrified. Go to NIA or any of the other places that calculate the REAL inflation rate... you know... the one that actually INCLUDE food and fuel and you will understand why I am distressed at this suggestion. Our current idiot and chief has us calculating inflation based upon the purchase of things we can do without while ignoring the stuff we need every single day to survive. Cash is losing value at a terrible rate and now that QE3 is not only a fact but also a fact that seems to exist without limits we are guaranteed not just inflation but a high probability of hyperinflation. SILVER, SILVER, SILVER!!!! Store it in food. Pay down debts that are not fixed rate (fixed rate ones are about to fizzle into nothingness in the face of inflation. Cash is better than stocks, bonds and paper forms of precious metals but that is not saying much! God save us from experts, they are the ones creating this mess.