22 Aug Have extra money? Thoughts on investing

Q. I have been saving cash to build an emergency fund. Now I have more than I need, which I figure is $30,000. I’ve saved $36,000 and I still have extra money after paying my bills and I’m not sure where to put it. I’m single and 52.
— Saver

A. Congratulations on setting up an emergency fund.

It is not sexy, but it is the foundation of any good financial plan.

Now if you ever have a money surprise or problem – and everyone will have one at some point – you’re in the position where you don’t have to have a fire sale to be able to access cash. That’s great.

So what to do with your extra cash?

We’re going to assume you don’t have any debt. If you do, pay that off first.

Then, you need to ask yourself when you will need that money back, said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton.

“If it’s less than five years, keep it in the bank,” Lynch said. “If it’s more than five years, you can allow your money to go through the market cycles and do reasonably well over time.”

Lynch offered a few ideas.

First, if you’re not maxing out your company retirement account, consider upping your contributions, he said.

“You get some nice tax benefits, tax-deferred growth, and at some point, you will want to retire,” Lynch said.

If you’re already maxing out the plan, Lynch said you can do something simple like invest regularly in an S&P 500 index fund. These are very low cost investments and at least to start off, it’s a great way to build a portfolio. As the account grows, you can start to diversify into other areas of the market.

You’re young, but another option for the extra money is to look at long-term care insurance.

“Especially if you are single, you want to control your future and if you need care – which is highly likely – you want to have control over who provides that care and where it is provided,” he said.

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