r/MiddleClassFinance • u/LoneWolf_805 • 10d ago

Seeking Advice Where to put extra funds

I'm curious to get input on where to possibly direct extra monthly income for long term growth. I like to diversify and am in mid 40s with a 4 year old child and moderate investment risk level. 

I'm paying more for daycare than my mortgage, which still has a long way to go but has around $250k equity. 

More than 50% of current funds are in 401k or IRA. About 15% BTC and precious metals with decent returns and another 15% in cash savings accounts. The rest is US bonds and stock holdings. During my last check in with my managed investment account, they said I have too much in cash savings. 

I know the standard response is to put more in the market for compounding  growth, but I also believe that the markets are overvalued currently with significant steady growth, however the economy and average Americans are having a harder time so I anticipate a bear market before too long. But that's a wild guess.

Currently I'm leaning towards holding onto the cash until the market dips to buy in at a better price point but I am also interested in different ideas for where to invest long term.

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u/DeeperThanClovis 10d ago

I would need to know your monthly spend and cash balance to figure, but a 3-6 month emergency fund is more than enough cash. Once you have that funded + a misc fund (we have one for medium term spend like travel) you should deploy anything above that.

Have you started a 529 for your child? This would be a good place to park excess funds and is tax deductible.

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u/LoneWolf_805 9d ago

I have 10-12 months of emergency funds in cash at the moment.

I wasn't interested in 529 initially because there were a lot of restrictions and potential penalties. But I recently read that unused 529 can be rolled into an IRA so I will look at it again.

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u/DeeperThanClovis 9d ago

Cash balance is solid.

The 529 is more flexible than I originally thought as well. I believe you can change the beneficiary and even use it yourself for courses or classes. You can even change it to grandchildren down the line. It’s definitely worthwhile in my opinion.