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Investment Advice For Recent LSU Graduate
Posted on 12/23/17 at 10:46 am
Posted on 12/23/17 at 10:46 am
My son graduated from LSU recently and I'm seeking some guidance from the Money Board on giving him investment advise.
A little background: He is 23 and is a Horticulture major and has a job with a landscaper. I've talked to him about building an emergency fund. He has this. I have talked to him about the importance of staying out of debt. He has none. I have talked to him about how important it is to pay himself first by being disciplined about saving some from each paycheck. He does this.
He has around $25,000 in his checking account that pays minimal interest. I have been talking to him about buying a few Vanguard mutual funds, but he is a little reluctant about buying in at all time highs in the market. Given his investment timeframe, he could buy in now or dollar cost average?
What advice would you give him if you were me to help him build a nest egg? What funds would you suggest for the long haul (Buy & Hold)? I appreciate it!
A little background: He is 23 and is a Horticulture major and has a job with a landscaper. I've talked to him about building an emergency fund. He has this. I have talked to him about the importance of staying out of debt. He has none. I have talked to him about how important it is to pay himself first by being disciplined about saving some from each paycheck. He does this.
He has around $25,000 in his checking account that pays minimal interest. I have been talking to him about buying a few Vanguard mutual funds, but he is a little reluctant about buying in at all time highs in the market. Given his investment timeframe, he could buy in now or dollar cost average?
What advice would you give him if you were me to help him build a nest egg? What funds would you suggest for the long haul (Buy & Hold)? I appreciate it!
9
Posted on 12/23/17 at 10:57 am to Clete Purcel
Slowly start a portfolio using 3 bucket system
1. Tax now - Mutual funds
2. Tax later - tax deferred ( 401k, IRA )
3. Tax never - Roth or WHole life ( WL designed around max accumulation not death benefit, yes there is a major difference. I suggest New York life policy. Great if you don't qualify for Roth ) I'd suggest a Nyl rep to help with all 3. Unless your just wanting to go self directed.
1. Tax now - Mutual funds
2. Tax later - tax deferred ( 401k, IRA )
3. Tax never - Roth or WHole life ( WL designed around max accumulation not death benefit, yes there is a major difference. I suggest New York life policy. Great if you don't qualify for Roth ) I'd suggest a Nyl rep to help with all 3. Unless your just wanting to go self directed.
This post was edited on 12/23/17 at 11:06 am
Posted on 12/23/17 at 11:00 am to Clete Purcel
While I appreciate his concern about buying at an all time high, you don't get lost years of Roth contributions back. He needs to max out his $5,500 now, and while I think it's a really bad idea, but if it's the only way he'll do it, he can stick it in a bond fund, or hell, money market fund.
But every year he lets pass without making that contribution will cost him tens of thousands of dollars in future tax free growth.
But every year he lets pass without making that contribution will cost him tens of thousands of dollars in future tax free growth.
Posted on 12/23/17 at 11:25 am to Clete Purcel
quote:
He has around $25,000 in his checking account that pays minimal interest. I have been talking to him about buying a few Vanguard mutual funds, but he is a little reluctant about buying in at all time highs in the market. Given his investment timeframe, he could buy in now or dollar cost average?
The way I see this is if those stocks are worth less in 30 some odd years when he is retirement age we are going to have bigger problems to deal with.
Posted on 12/23/17 at 11:45 am to Clete Purcel
quote:The Graduate, you say??
Investment Advice For Recent LSU Graduate
Posted on 12/23/17 at 12:27 pm to Clete Purcel
At 23 years old in 2018?
95% crypto
Inb4 Dow Jones enthusiasts with thier 10% gains on a good year
95% crypto
Inb4 Dow Jones enthusiasts with thier 10% gains on a good year
Posted on 12/23/17 at 2:20 pm to Clete Purcel
quote:
Horticulture major
do you really need a 4 year degree to landscape?
Posted on 12/23/17 at 2:20 pm to Clete Purcel
While great advice has been given, I’ll give my simplified answer:
Steady $200 or more per month auto drafted into a Roth IRA is a must. Invest in a wealth diversified fund.
Anything else is extra.
Steady $200 or more per month auto drafted into a Roth IRA is a must. Invest in a wealth diversified fund.
Anything else is extra.
Posted on 12/23/17 at 7:09 pm to Clete Purcel
Dollar cost averaging is fine.
So is lump sum investing as long as you understand market risk.
Sounds like he may want to dollar cost average so he does not get spooked out of market.
Time is his partner in investing. He should do well over 40 years in a low cost mutual fund.
So is lump sum investing as long as you understand market risk.
Sounds like he may want to dollar cost average so he does not get spooked out of market.
Time is his partner in investing. He should do well over 40 years in a low cost mutual fund.
Posted on 12/26/17 at 6:14 pm to Clete Purcel
Looking at headwinds for markets in '18 I would go ahead and do a full Roth contribution for '17 & '18 on Jan 1 and fully invest both contributions. That would put him at 11k into Roth IRAs.
I'd move directly into a portfolio that has a good international equity exposure as well. I wouldn't bother doing a DCA on the ROTHs. If he is risk averse, you can set up a regular brokerage account and DCA into that, it will buy down any losses he has.
Also- if he is 1099 I'd do a SEP to try and wipe out tax liability owed to the feds.
I'd move directly into a portfolio that has a good international equity exposure as well. I wouldn't bother doing a DCA on the ROTHs. If he is risk averse, you can set up a regular brokerage account and DCA into that, it will buy down any losses he has.
Also- if he is 1099 I'd do a SEP to try and wipe out tax liability owed to the feds.
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