Q. To preface, I am a twenty-something Defense Department civilian who will be furloughed the 11 days if Congress does not act. In June, I will have a $5,000 windfall from CD at maturity. I wanted to know the best possible option for this money. So far, I thought of fully funding my Roth IRA and saving the rest, adding to my emergency fund savings (which stands at about $25,000), funding my Thrift Savings Plan, or just investing in a taxable account (mutual fund, ETF, etc.) What do you recommend?
A. Your question is like telling me that you’re flying an airplane and need to know which switch you should throw next. If you’re flying the plane, you’re in the best position to judge. If you’re not qualified to fly the plane, then worrying about which switch is best isn’t really the key issue.
The answer to your question depends entirely upon you financial plan and your strategy for achieving your goals. If your cash reserves are too low, then this is the first solution to correct. If you’re carrying expensive debt, this might be the best use for the money. If the money is to be earmarked for retirement savings, then the TSP is the best choice. Whoever is responsible for designing and managing your lifetime financial plan should make the call, since they are responsible for the outcomes produced by the decision.