Financial Information
What will happen to me individually once the interest rates rise?
Question : What will happen to me individually once the interest rates rise?
my situation:
Rent
Have a job with a fixed income
Have 50K most of it in Vanguard Mutual Funds
Owe $ 250 on my credit card
Maxing out my Roth Ira every year VTIVX with vanguad
Thoughts?
ira interest rates
Best answer:
Answer by Aleks
It will make more sense to have some emergency fund in your saving account. It makes sense even with low interest rate though.
I hope it also means that the economy is recovering and your mutual funds are going to skyrocket.
It will be harder for you to buy your own place.
It sounds like you really have your act together – good job!
I’m with Aleks, though – everyone should have an emergency savings fund with at least 3-6 months’ worth of living expenses (everything – rent, food, utilities, gas, etc. – for most people a good amount is around $ 10K – $ 20K). This should be kept in a “boring” account like a money market (you could put half of it in CD’s to get a slightly better interest rate). First pay off your CC debt, then start building your emergency fund.
I have found that it comes in handy even for small emergencies and unexpected expenses like trips for family emergencies/funerals, new tires, “emergency” ski trips, etc. I just use that money, then spend the next few months building my account back up. It saves me from having to use my credit card for these things.
Keep building your Roth (VTIVX is a good fund), but maybe cut your monthly contribution in half, and use the other half to build up that emergency account.
Don’t worry about interest rates – when they rise it may cause a temporary dip in the stock market, but that only means you’ll be buying more shares with your regular investments. Also, you’ll start to earn more in your emergency fund.
I hope that helps – good luck!