I'm a recent college grad (computer science). I was lucky enough to get into some good investments in college and now have $450K in liquid assets. I've decided I'm definitely moving to San Francisco.

But what should I do with my money? I can get a decent software engineer job that pays $80K and splurge occasionally while investing most of it for retirement.

Or, and I'm leaning more towards this one, I could take a year 'off' and work on building my skillset, my networking and working on freelancing/SAAS/apps that can generate a passive income for me. Meanwhile keeping my eyes open for any good startup opportunity that may come my way.

Assuming I choose the latter, how should I treat my current capital? I think I should start a Roth IRA. Then keep my money 33% aggressive, 33% conservative, 33% fixed income? I expect to spend $50K/year in San Francisco (though while working on generating income sources) and need to keep myself a bit liquid in case a big-ish investment opportunity presents itself.

Am I on the right track? What would you do in my situation?

  • 2
    50K a year in SF? Good luck.
    – littleadv
    Commented Jul 26, 2012 at 6:58
  • 4
    You need income from a job to put money into a Roth IRA. Commented Jul 26, 2012 at 11:38
  • @mhoran_psprep You don't need to have a job to put money into a Roth IRA. There's no legal requirement to be employed. Commented Jul 26, 2012 at 13:30
  • 2
    You need taxable income though, also, a Roth IRA is not a vehicle to keep your assets liquid. Finally, the max contribution to Roth is $5,000 per year....
    – EkoostikMartin
    Commented Jul 27, 2012 at 14:27
  • 4
    For a Roth IRA, you need earned income, from a job that pays wages reported on a W-2 form or self-employment income reported on Schedule C, not just taxable income (e.g. interest or dividends or capital gains) as EkoosticMartin claims. Also the maximum annual contribution to a Roth IRA is the total earned income or $5000 ($6000 for people over 50), whichever is less. Roth IRA contributions are also not permitted to people with large incomes. Commented Jul 28, 2012 at 3:48

2 Answers 2

  1. You cannot dump $450K of cash into any type of retirement account. Retirement accounts have maximum annual contribution limits and earned income requirements. If the $450K is already in a retirement account you may be able to "rollover" these funds into a different type of account.

  2. I personally invest in dividend paying stocks and recommend the strategy for just about everyone. $450K earning 4% in dividends would generate ~$18K in annual dividends the first year and, compounded, would generate ~$220K in dividends over a 10-year period.

All this being said, I am not a registered professional of any kind and you should consult a professional before making any decisions.

And yes, I know this question is from 2012 :)


You should evaluate where to put your money based on when you need-by-date is.

If you need it in the next 5 years, I'd essentially keep it in cash or no-risk savings accounts/cds, money market accounts, etc.

If you need it further than 5 years from now, invest for the future with some form of asset allocation that matches your risk tolerance. Research asset allocation and decide how to divide amongst different types of investments. **Retirement accounts have earnings requirements and maximum contribution limits.

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