What to do extra money

[TXATX]

Trying to plan for the future. After we have maximized our work retirement 403b and 427, college savings, paid our debt. Let’s say we have 200-300K extra per year to invest.
What would you do? Besides index/ETF? Neither hubby or I are really into active property management but have been told to do rental properties

[jfoxcpacfp]

Done properly, the stock market is the best way to diversify your investments and consistently grow your wealth - only over the long term, of course. If you're throwing off so much extra cash, I'm guessing you're in a high tax bracket and may want to fund a DAF (Donor Advised Fund), should you be charitably inclined. If you want to invest in real estate without active management, look into REITs.

[Side Hustle Scrubs]

There’s nothing wrong with investing in low cost index funds in a taxable account. They get favorable qualified dividend tax rates and you only pay capital gains tax when you sell. Plus you can deduct losses using tax loss harvesting.

Jim talks about it here:

https://www.whitecoatinvestor.com/retirement-accounts/the-taxable-investment-account-2/

and here:

https://www.whitecoatinvestor.com/12-rules-for-simplicity-in-your-taxable-non-qualified-investing-account/

Real estate can be profitable, but it can also be a bottomless money pit. I would only recommend real estate if you’re actually interested in it, not just because it’s what you’re “supposed to do”.

[Peds]

Invest it. Spend it. Send some to me!

[TXATX]

Thank you. I agree we are definitely not interested in real estate.

[Molar Mechanic]

My plan based on similar numbers.

Maximize everything pre-tax, including defined benefit plan. Can defer upwards of 150k+. Depending in age.
Pay debt.
529s for the kids at the level I expect college to cost. If it costs more, I'll cash flow it, if it costs less, the grandkids have a head start.
Beyond that I like to mostly go into index funds with a side of syndicated real estate. The best options for this are in a not too old wci post. I've used 37th parallel, but some others are intriguing.

[adventure]

TXATX wrote:

Trying to plan for the future. After we have maximized our work retirement 403b and 427, college savings, paid our debt. Let’s say we have 200-300K extra per year to invest.
What would you do? Besides index/ETF? Neither hubby or I are really into active property management but have been told to do rental properties

Click to expand...

TXATX wrote:

Thank you. I agree we are definitely not interested in real estate.

Click to expand...

Do you have any interest (or really time) to venture into other types of investments? There are many options, but I think deciding if you have any time to put into them is worth deciding.

One advantage of a boring index fund is that it takes about 2 minutes per year to deal with...

 

[CordMcNally]

Keep plowing into taxable and look into a DAF. If you have no interest in real estate then I'd steer clear.

[childay]

Hookers and blow?

[DMFA]

Cashier's check payable to DMFA, please.

...why not real estate? It's very tax-efficient and has low correlation to the market (that's a good thing). There are management companies who will manage rather inexpensively. Doing it that way might be a bit boring, but the income-producing characteristic, ability to deduct depreciation, and the generally appreciating value of the asset can make it a great option.

If you don't want it, that's fine, it's not like you can't just take a chunk of your invested funds and put it into properties at any given time.

[Complete_newbie]

Seems like you want no stress: taxable account.

[Lithium]

Taxable account.  Look into the tax efficiency of various index funds and figure out the most optimal way to place different assets.