Should I invest in s&p 500 (Voo&schd) or continue getting 5.2% off of t-bills?

[imnotcrazy]

I save roughly $1700 every two weeks.

I had been thinking on it, and know that 3 year returns on VOO is 18.17% So this makes me wonder if i should be investing more in my taxable account towards the stock market?

I already maxed my Roth IRA for the year and a taxable would be what I can invest in next.

My T-bills are getting 5.2% as of right now and so would it be smarter to invest a little out of saving each check into market (for example instead of saving all 1700, save 1350 and put 350 in market) or just continue saving it all and getting 5.2% until I find an opportunity to use the cash?

Any further questions, please ask. thank y’all!

 

[j1991]

@imnotcrazy It really depends on what your goals are and your timeline.

If you don't need this money in the next 5 years, sp500 is far and away the superior investment.

 

[godisatulpa]

@j1991 maybe, maybe not.

the S&P 500 returned less than 1%/yr average from 2000-2012.

https://imgur.com/a/yZjkS1r

5% guaranteed would be over 5x the return of the S&P 500 in this era.

 

[j1991]

@godisatulpa Thats some nice cherries you got there bruv.

 

[wondering]

@godisatulpa And from 2009 until now it's averaged 13.71%. Let's all go cherry picking!

 

[zabuland]

@imnotcrazy When do you need this money? 5 years, probably investing it is worth it. Also if you haven’t, maxing out the 401k would be ideal too

 

[imnotcrazy]

@zabuland max 401k (which invests me in a 2060 target date fund) or taxable account?

 

[zabuland]

@imnotcrazy 401k because you can either a) defer taxes if traditional or b) pull out gains tax free if Roth. Target date funds are typically fine as long as the expense ratio isn’t absurd.

 

[blestman]

@imnotcrazy Saving and investing are not the same thing. Once you have saved, or are saving, enough money to reach your goal (emergency fund, buy a car, vacation, etc.) you can start investing for the long term using your Roth, a taxable account, and employer plans.

Your investment portfolio should have both equities (S&P500) and fixed income (T-bills). The allocation to each kind of investment depends on your age and risk tolerance.

 

[trueheart5]

@imnotcrazy If you’re saving long term. S&P is a lot smarter.

If you’re paranoid about some immediate need. Like saving for a house or a specific goal where preserving your principal for like 1-3 yrs is critical. Stick with lame 4-5% returns of gov bonds

 

[godisatulpa]

@imnotcrazy 5% guaranteed is difficult to sneeze at. it's getting close to the 'equity risk premium', the amount you need to earn from stocks above a guaranteed risk-free return.

 

[mikewujcik]

@imnotcrazy I do fxaix. mutual fund and do a recurring into it. it follows the snp too it becomes a set and forget vs a etf were I might think about timing a specific amount each add.

 

[urghay]

@imnotcrazy So if I have a Vanguard 403b through my employer can I elect to have that money invested into the s&p 500? It’s currently in a vanguard target date fund with an estimated return of 6% or so but 18% sounds much more appealing… im sure I’m missing a lot. Feel free to help shed some light.

 

[enjoythelittlethings]

@urghay I had the same question; I don’t think my employer has an s&p fund so I just have a target date as well.

 

[goneguy]

@imnotcrazy Just remember the historical average is 7% so 5% sounds good… but what if stocks are getting 10-15% per year right now? Is that something you’re ok missing out on?

 

[imnotcrazy]

@goneguy but should i put that in my 401k plan or my regular taxable brokerage account. my thought on 401k is im putting money in it and won’t be able to use it until i’m too old to enjoy it

 

[goneguy]

@imnotcrazy But will your brokerage money be for before then or after then? so many people say that but then live off salary and just contribute less… then use their brokerage account that has higher taxes

 

[imnotcrazy]

@goneguy im hoping in life i can use it around 40 but who knows what life with throw at you