Financial Checkup, Let's Discuss Positions, Holdings, and Thoughts for Near Future

[LoneSage]

nruva, if I gave you $10k, how would you invest that.

 

[cannonball]

I haven't got into anything new this past year aside from buying more shares of existing mutual funds in my roth IRA, but the stuff I've been holding is doing very well. My portfolio is about 25% cash at the moment. Not sure where a good chunk of that is going yet, but I'm doing something with it soon.

 

[Dr Shroom]

nruva, if I gave you $10k, how would you invest that.

Tiger penis wine.

 

[HDRchampion]

What do you guys recommend on how much savings should a person have at the age 25, 30, 35, 40yrs old etc...
Since banks dont give you shit on interest anymore, it looks like i have to start investing in stocks/mutual funds. How much should i be putting into those compare to savings account.

 

[cannonball]

Tiger penis wine.

I invested heavily into Taco Corp when they came out with their three penis wine.

 

[GohanX]

What do you guys recommend on how much savings should a person have at the age 25, 30, 35, 40yrs old etc...
Since banks dont give you shit on interest anymore, it looks like i have to start investing in stocks/mutual funds. How much should i be putting into those compare to savings account.

Assuming you have no debt, 6 months worth of expenses in a savings account, then invest.

 

[NeoSneth]

What do you guys recommend on how much savings should a person have at the age 25, 30, 35, 40yrs old etc...
Since banks dont give you shit on interest anymore, it looks like i have to start investing in stocks/mutual funds. How much should i be putting into those compare to savings account.

If you are saving just for retirement:
Max out Roth IRA. Single with average income. $5,500 a year. $460 month.
Contribute to 401k up to company match. If your company doesn't have a match, then i would probably put it elsewhere.

Saving for house down payment or general funds?
As much as you feel comfortable. $50 a month, $500 a month. Both are fine, but you need to save.
I put this kind of money in Mutuals, Index Funds, or ETF's. These are diversified, but only offer moderate growth. The plus is you can sell whenever you need the money.
I would recommend holding on to most stocks for 1 year to skip on short term taxes. Also check for fund management fee's. Most reputable funds are reasonable fees. Fidelity is pretty safe as people mentioned.

I didn't get into individual stocks until I learned more from the above funds. It's also not worth buying 1 or 2 shares of stock. Once you get more confidence in your own investments, you can cash out diversified funds and put into individual stocks. I still use both.


It is a lot of money to see sit in these accounts knowing you will never touch them until you are Old in some cases. I used to live paycheck to paycheck, so putting $460 into Roth IRA every month was insane. Luckily I doubled my income in one year, and i was able to make this savings switch and never look back. i think gradually switching to savings for the middle class is rough, especially for people obsessed with collecting videogames and random junk.

 

[RabbitTroop]

nruva, if I gave you $10k, how would you invest that.

$10K is a really good starting investment. It really depends on your risk, and what your time frame of this investment is. If this is $10K you won't need any time soon, and you don't foresee needing it for some random emergency (read, you have a month's worth of pay in savings in the bank already for just such a thing), then I'd say dropping it into a wide classed stock market ETF is the easiest solution. Say, QQQ, which is a very solid performing wide-market ETF by Invesco, or Vanguard's VTI, which hasn't had the year over year high returns like QQQ, but is a similar bucket ETF that basically tracks the market.

If you want to be a little more diverse, maybe look at a 80% US stock, 10% foreign stock, 10% tax-shielded bonds. Or stay all US domestic, and target specific mid cap or growth companies that could far outperform the markets as a whole. Honestly, if you go all in QQQ, it's probably going to give you a lot of the same results, as they do some hedging there as well (trying to guess who's going to fall out of the SP500, and who's going to take their place, etc) which could do about the same.

I'm a long time supporter of bonds. I've had some very solid bond years, but with the drain the years of quantitative easing has had on the bond market, I pulled completely out this spring. I'll be back in at least 5% by the end of the year, though, because as soon as interest rates start to rise, bonds are ready to pop... And rates are going to rise eventually.

So... Yeah... Totally too long, nobody read any of it, but my thought would be, $10K is a great start, and if you don't want to do the research or micro-manage everything (and honestly, who has time for that), look into putting the majority in something like QQQ or VTI and then carve out smaller percentages to place things you care about (Chinese companies you use frequently, safer bond investments that will have lower yield, but less crazy swings, etc).

Oh, and... The above is for entertainment only and I am not responsible for you losing your $10K, being stranded in China forever, and becoming a sex slave to make ends meet (meat).

 

[RabbitTroop]

What do you guys recommend on how much savings should a person have at the age 25, 30, 35, 40yrs old etc...
Since banks dont give you shit on interest anymore, it looks like i have to start investing in stocks/mutual funds. How much should i be putting into those compare to savings account.

My thoughts on this is cash is really there for emergencies and to help you sleep better at night knowing that if and when the markets take a turn, you'll be OK for a while to ride it out. The last thing you want to do is have to cash out of some down-investments during a bad year because you need to pay the bills. That's just a shitty situation. I've had some really bad years (2008) where I lost a lot of money (28%) and I was able to bite my lip and just log out of the investment accounts and basically do the whole ostrich-head-in-the-sand approach that ended up being for the best.

Markets rebound, but if I really, really needed that money to pay for anything I'd have cashed out in a second, taken the lost and had to deal with it. As is I made back everything and more the following year by being able to just stay put.

So, you need to be able to ride out the storm. My personally thoughts on this is most people, myself included, really like to straddle that line of what we can do each month. It's inevitable, but no matter what we always slip up and we're left looking like a fool. For that reason, I think at the bare minimum you should have the equivalent of one extra paycheck in a savings account, ready to go if you need it. Ultimately, most people say six months to a year of savings, and I think that's great, but unrealistic for a lot of people. Not only that, but if you spent 2013 building up three to six months of savings in cash, you would have lost out on potentially double digit returns in the stock market. Likewise, there are people in this thread that are near and over 10% this year, and even the best savings accounts around offer 1% and under interest.

So, I'd save up one to two paychecks in cash, have that available, and really make the rest start making money for you ASAP. Over time, build up the coffers at a small percentage of what you're looking to save/invest each month, and work up to that six to twelve months, but I wouldn't shoot for that right away... It's just not practical for someone in their 20-40s to be carrying so much cash that isn't doing anything for them. Stick it in the bond market and at least make 2-4% on real low risk investments instead, if that's all you're doing.

 

[RabbitTroop]

One more thing I'll add. I love Vanguard. I have a personal account with them, and their fees are super low on their funds.

You can get everything from tax-protected money market accounts for several states, tons of bonds, alternatives, and stock market funds, and trade any of their ETFs for free in their brokerage account. Outside investments and ETFs are $7 for most people, and as low as $2 or even free depending on how much you have invested with them. They even offer low cost financial guidance (and it's free for certain customers) as well.

If you're looking for a place to start, I would strongly encourage you to check out what they have to offer.

 

[HDRchampion]

The problem i have is that i have no 401K plan. I just started my ROTH IRA last year & continue paying the $460 or so every month to get the max amount allowed for the next 30years. That's a decent amount of money for retirement but i dont feel that will even be enough as i plan to live a long time after retirement. I doubt there will be any Social Security due to those sex maniac baby boomers eating it all up.

So what are my options besides mutual funds & stocks? Do you guys feel CD's interest rates will go up anytime soon? What are your thoughts on HSA or this new Obama Myra rolling out this year.

 

[Zapperkhan]

I started maxing Roth IRA around 6 years ago at 22 and more recently started doing a 401k through work for 10% of my paycheck with my work doing a 4% match. I'm curious on some alternatives since these are retirement accounts maybe taking that 6% extra from the 401k and putting it into something that would be in an account that I could borrow off of whenever I decide to make a house purchase or something. Thinking of just doing something easy like transferring 300 a month to savings, but i'm curious on some other low maintenance options.

 

[lithy]

If you have no 401K you can contribute to a Tradition IRA. I believe the cap for this year is 12,000 and will probably go up for 2015.

As far as how much you need to retire, the easiest way is to figure out your annual expenses (or your projected annual expenses at retirement). Then save about 25x that amount minimum. This should allow you to withdraw 3-4% of your money each year to cover your expenses and if the markets perform to average you won't really touch the principal balance of your accounts. This way you could theoretically live 100 years in retirement unless the market totally tanks. In which case everyone is fucked anyway.

Back when I got into this, RabbitTroop recommended GNUcash. It is free accounting software that I've used for just about 2 full years now and I have a much better idea of where my money goes and then I can decide whether or not i want to make cuts in any given category.

And just to add to the opinions about how much cash reserves/emergency account to have. We keep about 3 months worth of regular expenses, but since we are a dual income household and it is extremely unlikely that we'll both lose our jobs at the same time, this is more like 6 months expenses. If things looked really dire, we could easily make cuts as well to stretch the amount to a year. I feel like that's plenty, although I also make sure to budget cash amounts for projected large expenses like replacing a car in the near future or the A/C in the house.

 

[Adderall]

I started maxing Roth IRA around 6 years ago at 22 and more recently started doing a 401k through work for 10% of my paycheck with my work doing a 4% match. I'm curious on some alternatives since these are retirement accounts maybe taking that 6% extra from the 401k and putting it into something that would be in an account that I could borrow off of whenever I decide to make a house purchase or something. Thinking of just doing something easy like transferring 300 a month to savings, but i'm curious on some other low maintenance options.

If you're going to buy a house, look into your specific 401k first. I haven't used it, but my 401k lets me borrow against it for a house down payment. Yes, you're losing some gains by not having as much in your 401k while borrowing, but your payments are essentially paying yourself back. It seems like it would be worth checking out.

 

[GohanX]

I would argue that if you don't have enough liquid cash to make the down payment you probably shouldn't be purchasing a home. Also, do the math before borrowing against your 401k, the lost money is a hell of a lot more expensive than you think when looking at a 30 year timeline.

 

[Zapperkhan]

I would argue that if you don't have enough liquid cash to make the down payment you probably shouldn't be purchasing a home. Also, do the math before borrowing against your 401k, the lost money is a hell of a lot more expensive than you think when looking at a 30 year timeline.

I'm not really looking into a home anytime soon. Maybe in 5 years or so. Mainly looking for an low maintenance way to put away 6% or so away. Setting up a monthly bank transfer to a savings might do the trick just to keep it away from me, just wondering if there's something better to let the money grow while I wait.

 

[HDRchampion]

If you have no 401K you can contribute to a Tradition IRA. I believe the cap for this year is 12,000 and will probably go up for 2015.

As far as how much you need to retire, the easiest way is to figure out your annual expenses (or your projected annual expenses at retirement). Then save about 25x that amount minimum. This should allow you to withdraw 3-4% of your money each year to cover your expenses and if the markets perform to average you won't really touch the principal balance of your accounts. This way you could theoretically live 100 years in retirement unless the market totally tanks. In which case everyone is fucked anyway.

Back when I got into this, RabbitTroop recommended GNUcash. It is free accounting software that I've used for just about 2 full years now and I have a much better idea of where my money goes and then I can decide whether or not i want to make cuts in any given category.

And just to add to the opinions about how much cash reserves/emergency account to have. We keep about 3 months worth of regular expenses, but since we are a dual income household and it is extremely unlikely that we'll both lose our jobs at the same time, this is more like 6 months expenses. If things looked really dire, we could easily make cuts as well to stretch the amount to a year. I feel like that's plenty, although I also make sure to budget cash amounts for projected large expenses like replacing a car in the near future or the A/C in the house.

Traditional IRA? I thought the most you can contribute is $5,500 & that's for combine of Traditional & Roth? Are you talking about a different IRA? Also saving 25x amount of yearly expenses seem pretty impossible. Say my yearly expense is $40,000 a year, i would need to save 1 million. Im probably misunderstanding what you're saying.

Setting up a monthly bank transfer to a savings might do the trick just to keep it away from me, just wondering if there's something better to let the money grow while I wait.

Yeah im in that same situation, i have money left over but if dont save it or put somewhere its going to get spent.

I really want to get into this stock thing but its pretty much a 2nd language. I have no idea & dont really want to put to much effort in learning this on my own.

 

[lithy]

Traditional IRA? I thought the most you can contribute is $5,500 & that's for combine of Traditional & Roth? Are you talking about a different IRA? Also saving 25x amount of yearly expenses seem pretty impossible. Say my yearly expense is $40,000 a year, i would need to save 1 million. Im probably misunderstanding what you're saying.

A Traditional IRA is made with pre-tax earnings. You set up the account and then you notify payroll about the details and it gets deducted from your paycheck. I'm not 100% on that info because I've never had to do it, but I do know that you can put in 12k pre-tax as well as 5500 post tax for the Roth.

As for how much you need to save, yes it can seem daunting, but get started. If you have a 20-30 year timeline, and you can even conservatively expect 5% growth each year, your money will grow. As the balance grows, the earnings grow. Then you can even factor in whatever Social Security this generation might actually end up with and you might find yourself ahead in retirement.

The easiest way to do it is to set a percentage of your income aside now and as you make more money, don't change your percentages. Or conversely, spend only a set amount and anything extra goes to savings. Your contributions will increase.

Pretty sure that a certain member that started this thread told me something along the lines of "You can always spend more, the trick is what you save." The point being, whether you make 20k or 200k if you are saving nothing, you're always living paycheck to paycheck, spending what you bring in. Pay yourself first, put at least 20% of your income away first and treat those accounts as totally off limits. Obviously if disaster strikes it is there, but you don't want to look at a 25k investment account and think that you could just about buy a Euro Kizuna right about now.

There are a lot of stereotypical money advice phrases in this post. The point is, whatever you do, start saving now.

 

[HDRchampion]

A Traditional IRA is made with pre-tax earnings. You set up the account and then you notify payroll about the details and it gets deducted from your paycheck. I'm not 100% on that info because I've never had to do it, but I do know that you can put in 12k pre-tax as well as 5500 post tax for the Roth.

As for how much you need to save, yes it can seem daunting, but get started. If you have a 20-30 year timeline, and you can even conservatively expect 5% growth each year, your money will grow. As the balance grows, the earnings grow. Then you can even factor in whatever Social Security this generation might actually end up with and you might find yourself ahead in retirement.

The easiest way to do it is to set a percentage of your income aside now and as you make more money, don't change your percentages. Or conversely, spend only a set amount and anything extra goes to savings. Your contributions will increase.

Pretty sure that a certain member that started this thread told me something along the lines of "You can always spend more, the trick is what you save." The point being, whether you make 20k or 200k if you are saving nothing, you're always living paycheck to paycheck, spending what you bring in. Pay yourself first, put at least 20% of your income away first and treat those accounts as totally off limits. Obviously if disaster strikes it is there, but you don't want to look at a 25k investment account and think that you could just about buy a Euro Kizuna right about now.

There are a lot of stereotypical money advice phrases in this post. The point is, whatever you do, start saving now.

Do you have a link that shows you can contribute $12,000? Everything i see says $5,500 & i think that's what the bank told me too when i did my Roth last year. This would be great if i can do this, more money go to somewhere instead of video games.

One last thing i dont understand is that 5% growth each year comment. How does your money grow, is it from all the investments or savings? The most i ever got in my savings was less then 1% a year. I used to get about 4% on CDs a decade ago.

This all good info, i wish my mindset was like this when i got out of highschool. Instead of buying stupid shit, i could of been saving for the future & ahead of the game.

 

[lithy]

Do you have a link that shows you can contribute $12,000? Everything i see says $5,500 & i think that's what the bank told me too when i did my Roth last year. This would be great if i can do this, more money go to somewhere instead of video games.

One last thing i dont understand is that 5% growth each year comment. How does your money grow, is it from all the investments or savings? The most i ever got in my savings was less then 1% a year. I used to get about 4% on CDs a decade ago.

This all good info, i wish my mindset was like this when i got out of highschool. Instead of buying stupid shit, i could of been saving for the future & ahead of the game.

Looking now, I guess you're right, I must have mixed it up. So I guess your only choice is to open an account with a company like Vanguard and use post-tax money.

When you buy shares of certain funds they generally are diversified for you. You basically just want to park your money in a fund that tracks the larger stock indexes. These funds will also pay out reinvested dividends, which is basically free money.

You're right though that savings account interest and CD rates are worthless right now, other than your emergency fund that needs to be really accessible you should avoid putting much money in a regular bank savings account.

 

[theMot]

I mentioned in the other thread I don't do stocks (shares we call them here) I have always been more into property. The property market here in Sydney has been extremely strong over the last 18 months - 20-30% increases across the board.

Below is another (did a similar one last year) small development I am doing soon, building at the back of a house to create a new tenancy, should put another $200 in my pocket clear p/week after costs..

 

[LoneSage]

I mentioned in the other thread I don't do stocks (shares we call them here) I have always been more into property. The property market here in Sydney has been extremely strong over the last 18 months - 20-30% increases across the board.

Maybe this is off-topic, but what's the number one thing rich people buy/invest in? What gave clans/families power a thousand years ago? It's always been about property.

Now I'm just a lil' neckbeard and all, but I think property has got to be the best investment.

 

[SNKorSWM]

A thousand years ago this place has nothing but Native Americans. Today what's left of them runs the casino business.

 

[LoneSage]

A thousand years ago this place has nothing but Native Americans. Today what's left of them runs the casino business.

Who took the land from them? That country is now the superpower of the world.

 

[OMFG]

For those that are just getting into the market, focus on businesses that payout a decent quarterly dividend. Take the dividends and roll back into stock purchasing of your choice. Treat the initial investments like any 401k and don't cash out in a panic at the first sign of market share drop.

Do your own research into the products you're investing in and don't leave that responsibility to any advisor. Finally, check how much it'll cost you per transaction. If you want any auto transactions to occur when a stock gains an certain percentage (ex. sell quarter, half of shares at net profit of 30%), make sure that any idle cash in money market accounts are accruing significant interest after you sell. Shop around for services that'll keep the money working for you while you look for other investment opportunities in the meantime.

While these may be basic principles, you'd be surprised how many people lose sight of managing their investments.