I run a small single-member LLC on the side in addition to my main job. Right now, I don’t have any employees, and the business brings in some income. The issue is, the money is just sitting in a business checking and savings account with a local credit union. It’s safe there, but it’s not really growing. I know this isn’t the best way to handle it, especially with inflation and other options that could help it grow.
I’m looking for advice on how to get my money to work better for me. Should I move some of it to a high-yield savings account for businesses? Or maybe look into low-risk investments like bonds or mutual funds? I’m not sure what’s the best option to keep the risk low but still get some growth.
I’ve also read about tax-advantaged accounts like solo 401(k)s or IRAs, which could be another way to grow the funds. But I’m not sure if that makes sense for my situation or if there are other strategies that could work better.
Any advice from people who’ve been in a similar spot? I’m hoping to get the money working for me without putting it at too much risk. Thanks in advance for any suggestions!
Since you’re an LLC, the money from your business is already passed through to you as the sole owner, no matter which account it’s sitting in. I’d suggest maxing out any pre-tax accounts first, like a Traditional IRA ($7k), and you could set up a solo 401k or SEP IRA to help lower your taxable income.
If there’s a way to reinvest in your business to make the income grow, that’s usually a good option, but I know that can be tricky depending on the business.
That depends. If you invested during the 2000 bubble, it took about 12 years just to break even. And I say this as someone all-in on VOO. It’s a good option, but people need to know the risks if they might need the money in a few years.
Not sure that’s the right approach for the person who posted. It sounds like they might need this cash for business expenses. A money market fund or high-yield business savings could work better. Also, saying “double your money in 5-6 years” is a big claim.
We should find out what the original poster wants to use this money for before suggesting long-term investments like retirement accounts.
Are those the only three funds you recommend? I’ve looked into about 10 different ETFs I’m interested in once I have extra cash to invest. VOO, VTI, SPY, QQQ, SCHD, IVV, VYM, DHRO, SPYD, VIG… is it better to just focus on a few or spread it across more? Trying to get as much info as I can before I jump in.
A lot of those overlap. Most people choose something like VTI/VOO and VXUS for better coverage. You might want to check out r/bogleheads for some solid advice.
If you need it to be liquid for bills, a high-yield savings account is probably the way to go. If you can wait a bit longer to access it, ETFs could be worth considering.
Since interest accrues daily, even leaving it in there for a short time can earn you something. It’s not a lot, but it’s easy.