I know what I want to do, but I'm not sure how to go about investing my money
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I know what I want to do, but I'm not sure how to go about investing my money
Posted by TDawg1313 on 12/7 at 11:23 pm
Quick background: Just out of college and have been at my current job for about 14 months. I currently put 10% pre-tax into a 401k through work in which my company matches 6% of that. After figuring out my budget over the past few months, I figure that I have another 10% after tax leftover that I want to invest.

What I want to do is put 5% in a stable, but liquid fund that I can use as my emergency fund. For this, I'm thinking of opening up a Roth IRA through Vanguard (seems to be a popular choice here with the low fees).

For the other 5%, I'd like to be more aggressive with it and buy stocks.

I have never done this before and I'm not really sure what the best way to go about this is. Should I open up two separate accounts? What are the best options for each of my 5% keeping in mind what I want to do? Any help would be appreciated.



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Posted by Tmacelroy12 on 12/8 at 12:14 am to TDawg1313
If you are looking to buy stocks, I would advise looking at certain indices rather than individual stocks. I don't think the casual investor should try to play their money in the stock market when they are truly not devoting a decent amount of time in researching stocks. It takes a lot of time to know what positions to take, and a lot of following the market and news to get a good grasp on individual stocks.

You may know that when you invest your money in Roth IRA, that money is taxable. So keep that in mind. I just graduated as well, and I'm putting 10% into Roth IRAs that I allocated between 70% stock indices and 30% bonds.



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Posted by matthew25 on 12/8 at 1:09 am to Tmacelroy12
OP: At your age, I would go all in on either/all of these Vanguard blue-chip equity funds: VDIGX, VDAIX, and VEIPX. Take a look at the top 10 holdings of each.

Also, compare these funds to the top blue chip funds at Fidelity, T. Rowe, and Pimco



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Posted by PhillyTide on 12/8 at 8:27 am to TDawg1313
quote:

What I want to do is put 5% in a stable, but liquid fund that I can use as my emergency fund.


Emergency cash should be in a savings account.



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Posted by Maniac979 on 12/8 at 9:07 am to TDawg1313
(no message)

This post was edited on 1/2 at 1:46 pm

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Posted by gatorsimz on 12/8 at 10:13 am to TDawg1313
I max out my Roth before anything else. With $16+T of debt and SS and Medicare on the path to insolvency, I don't want to imagine where tax rates will be 30 years from now.

You should look into putting as much of that 10% leftover into a Roth. It can work as your emergency savings since you can pull your contributions out at any time with no taxes. Look into some ETFs, they're liquid enough. Plus theres a better chance you wont be outpaced by inflation if you were to this over just using a savings.

Open 1 account. Put 5% into more conservative ETFs like short/intermediate term bonds, investment grade corporate bonds, emerging market bonds. 5% into more aggressive ETFs like growth, large cap, small cap, real estate.

There will be small expense fees but IMO its worth it. You will reduce your volatility doing it this way.


This post was edited on 12/8 at 10:16 am

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Posted by TDawg1313 on 12/8 at 2:39 pm to gatorsimz
quote:

Emergency cash should be in a savings account.

I can withdraw my contributions from a Roth with no penalties.
quote:

I would look at Vanguard ETF index funds rather than mutual funds as suggested above. Also agree you should stay away from individual stocks for the reasons mentioned above.

I'm interested in learning more about individual stocks, so I wanted to try that out for a bit and see if I like it or it just ends up being too much to worry about. Do they have something online where I can completely replicated everything about investing in the stock market without using actual money so I can learn?
quote:

I max out my Roth before anything else. With $16+T of debt and SS and Medicare on the path to insolvency, I don't want to imagine where tax rates will be 30 years from now.

You should look into putting as much of that 10% leftover into a Roth. It can work as your emergency savings since you can pull your contributions out at any time with no taxes. Look into some ETFs, they're liquid enough. Plus theres a better chance you wont be outpaced by inflation if you were to this over just using a savings.

Open 1 account. Put 5% into more conservative ETFs like short/intermediate term bonds, investment grade corporate bonds, emerging market bonds. 5% into more aggressive ETFs like growth, large cap, small cap, real estate.

There will be small expense fees but IMO its worth it. You will reduce your volatility doing it this way.

I could max out a Roth with my 10% and that's what I was initially considering doing. I like your idea of putting 5% into more conservative ETFs and 5% in more aggressive. That was the basic idea I was going for, half conservative and half aggressive. I'm just flip flopping on what to do on the 5% aggressive side. I'd like to learn more about the stock market, but feel like I would do better by just putting it into an aggressive ETF.



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Posted by Dan on 12/8 at 4:45 pm to TDawg1313
quote:

Do they have something online where I can completely replicated everything about investing in the stock market without using actual money so I can learn?


yes google paper trading, or virtual trading. I think scottrade does it. most online brokerages offer it to get you in their door



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Posted by NC_Tigah on 12/8 at 5:38 pm to PhillyTide
quote:

quote:

What I want to do is put 5% in a stable, but liquid fund that I can use as my emergency fund.
Emergency cash should be in a savings account.
Several ways to skin that cat. I've never used a savings account. If investments are maintained in an account with check writing privileges, uninvested cash in that portfolio would suffice.



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