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Investing your $$

February 13th, 2006 at 03:55 pm

Previously, I had written about how we were selling the house this spring/summer and how I was confused as to what I should do with the money.
I had figured:
$4,000 into a Roth
some money into ING CD's...

and I had no idea what to do with the rest.

I found my answer this weekend in the book, "Prince Charming Isn't Coming."
First of all, I found out what I didn't want to do with my money - I didn't want my money languishing in something that would cause inflation to take over. I didn't want to use the money for everyday expenses and I didn't want to lose my money.
Well, even at 4.something%, with taxes taken out and inflation, over the long haul, I would not make money in an ING CD. And that is, what I found out, what I want. I want to make some money and grow a nest egg. Not just let it be "safe" in an FDIC insured account, even though the idea is extremely appealing, it just Doesn't work that way! My favorite chapter in the book is called, "Risk Is Not a SYnonum for Loss" and it was a chapter that really helped me to see that what I needed to do was bite the bullet and invest in the stock market. Yes, yes, I already invest in the stock market through an IRA and my retirement at work, but outside of retirement accounts, I have not invested.
So, here's my plan.
This is money for the long-term. I want it set aside for at least 7 years and probably much, much longer.
$4,000 will go into an IRA as planned, $3,000 will stay in ING as an emergency fund, the remainder will be placed into stocks or no-load stock mutual funds (wherever I can find good quality and not big fees)and next year, I'll take another $4,000 and place it into an IRA. The rest will stay outside of the retirement vehicles. This is so very scary for me. Of course, I will not buy everything all at once, since it is much, much better to dollar cost average. For example, whatever my amount, say it is $12,000, I'll divide that amount by 12 months and end up investing $1,000 each month into my chosen stocks. This recipe then calls for a "sit, wait and see" attitude since I will have done my homework and invested in stocks I think have good long-term potential. No selling at low points, no panicking, just buy and hold. Huh. Can I do it? Can I take the time to research Morningstar and Baron's and find something worthwhile? I'll have to. I think this is the only way to make sure my money doesn't stagnate.
My retirement money is in a handful of index funds, and I'm happy with that. Maybe I can do something similar with the other money.
None of this will take place until the house is sold, however, so I'd better get crackin' de-cluttering and clean, clean, clean! Not that we're a messy family, but things do tend to get away from a person. Some of the screens need to be repaired and our windows need to be washed inside and out. There is some trim that needs to be put up that requires hiring a carpenter and I need to replace a swath of carpet. Ah, yes, and we need to seal the basement concrete areas with something that will look nice. Maybe a grey will do. Since I'm pregnant, I can't do any of the painting, so that may have to get hired out. I'm budgeting about $2,000 for home fix-its in order to get a higher price for the house.
Hope it works!

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