How to invest extra money?

How to invest extra money?
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My wife and I are both 36 years old, earn $50k/yr each. We have no debt, no kids, own our home outright and contribute 5% of our income to an employer retirement plan (employer gives 10%). We live frugally and after our expenses we have $4k extra each month. Currently we are adding that to a high interest savings account, but would love to make our money work harder with the hope of an early retirement.

We have no experience with investing other than mandatory contributions we’ve made via our employer and find the process of investing daunting.

Any help would be much appreciated!


Hi @frugalcouple! Thanks for joining the community.

First, I want to say that you’re already investing by contributing to those retirement accounts — so don’t be intimidated by the idea. You’re an investor, and you should own that. You’ve done a great job so far, and you’re clearly very capable.

When I hear a situation like yours, my first thought is an IRA — that’s a great place to put extra money outside of your employer retirement plan, and it will help you save more for that early retirement you’re after. You can choose between a Roth and a traditional IRA, though often a Roth is a good choice for early retirees because you can pull out the contributions you make to the account at any time.

We have a complete guide to IRAs here, with everything you need to know — including how to open the account, how to choose between a Roth and a traditional, and how to invest it.

It sounds like with the extra money you have, you’ll max out the IRA’s contribution limit fairly quickly — you can each contribute $6,000 in 2019. Beyond that, you could also contribute more to your employer plan – a 401(k) has a higher contribution limit of $19,000. And above that, there’s always a regular taxable investment account, which is good for early retirement because there are no restrictions on when or how you pull your money and earnings back out.

You might also find this article about how to retire early helpful:

Let us know what other questions you have.


Hi @frugalcouple and congrats on managing your finances so well! It sounds like you’re definitely in a great position to consider retiring early.

I definitely +1 everything @aoshea says above. I also wanted to add in some more reading materials for you! :smiley: The question of how to invest for retirement is one I hear a lot, so I wrote a story about simple retirement investment portfolios here:

And stress-free investing for retirement, here:

Another thing to consider is that retirement accounts of course tend to restrict withdrawals before age 59-1/2. You can withdraw your contributions (not your earnings) from a Roth IRA any time without penalty or taxes, but early withdrawal of your Roth earnings, and any early withdrawals from a traditional IRA or 401(k) will get hammered by penalties and taxes. So there are definitely early retirees who focused on maxing out a regular taxable brokerage account in addition to or instead of maxing out retirement accounts. (I think MadFientist might have a post about this? Definitely there are early retirees/FIRE folks who write about this.)

If you start to delve into that route, then you’ll want the best broker for your situation, and we’ve done the research to come up with some top brokers:

Hope that helps, and do let us know how it goes for you!


There’s a thing called “Micro-investing”. There are some micro-investment apps that you can install on your phone and they let you invest your spare change in stocks. There are many success stories around like. Look for Acorns, Robinhood and Stash. All three of them are popular micro-investing apps.


Thanks for weighing in @denise.hilton! You’re correct, micro-investing apps can be a great boost to your savings, as they’ll round up your purchases and squirrel away extra money. Roundups aren’t typically going to amount to enough for retirement, but they’ll certainly help! Stash and Acorns both offer this service: