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Message
First time investor, advice
Posted on 2/25/21 at 10:07 am
Posted on 2/25/21 at 10:07 am
A little background. I am 34. The extent of my investing thus far is my 401K at work (10%) and I put an extra $300 a month towards my mortgage (3.375% interest rate).
I have a decent nest egg in my savings account and no debt outside of my mortgage. Looking to dip my toes into the water with some long term investment accounts.
What would Money Talk suggest? I opened a TDAmeritrade account to poke around. Are mutual funds a good place to get started? Talk to me like a newb because as far as investing goes, I am.
I have a decent nest egg in my savings account and no debt outside of my mortgage. Looking to dip my toes into the water with some long term investment accounts.
What would Money Talk suggest? I opened a TDAmeritrade account to poke around. Are mutual funds a good place to get started? Talk to me like a newb because as far as investing goes, I am.
8
Posted on 2/25/21 at 10:17 am to ChewyDante
I broke myself in with ETF's and a couple major players like MSFT and WMT. Slowly integrated buying individual stocks.
This post was edited on 2/25/21 at 10:19 am
Posted on 2/25/21 at 10:26 am to ChewyDante
Have you opened a Roth IRA? I am guessing you are maxing out your employer match.
After that I would open a Roth IRA and try to put the maximum every year. The money in your new Roth I would invest in low cost broad index funds.
Bogleheads on index funds
3 fund lazy approach typically leads to best performance for most investors. I think there are a lot of different opinions on what % should be bonds however. I think this should point you in the right direction for what funds to look for.
Bogleheads Three Fund Approach
After that I would open a Roth IRA and try to put the maximum every year. The money in your new Roth I would invest in low cost broad index funds.
Bogleheads on index funds
3 fund lazy approach typically leads to best performance for most investors. I think there are a lot of different opinions on what % should be bonds however. I think this should point you in the right direction for what funds to look for.
Bogleheads Three Fund Approach
This post was edited on 2/25/21 at 10:29 am
Posted on 2/25/21 at 10:34 am to ChewyDante
Start with ETF's for bulk of your portfolio (50% SPY and 50% QQQ for example). Then pick a handful of companies that you personally know very well as a customer or whatnot; and go through a few earnings reports...get to know the price action on these companies and responses to earnings and news, etc.
That's pretty much how I started. From there, you will know what direction you want to go next. If your index etf's are doing just as well as your handpicked stocks; then put your money in index ETF's and focus on your primary income. It's not worth taking on increased risk and a 2nd job worth of hours to manage your portfolio if you cant beat QQQ. That's my personal benchmark for whether or not I'm wasting time and energy.
That's pretty much how I started. From there, you will know what direction you want to go next. If your index etf's are doing just as well as your handpicked stocks; then put your money in index ETF's and focus on your primary income. It's not worth taking on increased risk and a 2nd job worth of hours to manage your portfolio if you cant beat QQQ. That's my personal benchmark for whether or not I'm wasting time and energy.
Posted on 2/25/21 at 10:35 am to ChewyDante
If your 401K allows it, I would suggest taking a small portion of your retirement (no more than 5%) and putting it at risk by buying stocks in your 401K. Stock investing is not for the faint of heart, and your best to keep the majority of your money in index funds. Keeping it in your 401K will shield you from capital gains taxes which I expect to go up.
Posted on 2/25/21 at 10:39 am to Auburn80
quote:
First time investor, advice
quote:Yeah, don't do this
I would suggest taking a small portion of your retirement (no more than 5%) and putting it at risk by buying stocks in your 401K.
Posted on 2/25/21 at 10:45 am to castorinho
quote:
Yeah, don't do this
Pretty amazing how this board has changed over the last year. While there is a lot more traffic, I would think before 90% of the responses would be people saying simple index fund approach is the key especially for new investors.
Exact opposite is happening now
Posted on 2/25/21 at 10:47 am to ChewyDante
quote:Best advice I can give is, REFINANCE THAT MORTGAGE RATE! All time lows right now, that will likely never be seen again.
A little background. I am 34. The extent of my investing thus far is my 401K at work (10%) and I put an extra $300 a month towards my mortgage (3.375% interest rate).
Posted on 2/25/21 at 10:53 am to greygoose
quote:
Best advice I can give is, REFINANCE THAT MORTGAGE RATE! All time lows right now, that will likely never be seen again.
Agreed. If you can knock 1% off do it.
Posted on 2/25/21 at 11:11 am to UltimaParadox
quote:
Have you opened a Roth IRA?
That's the #1 question, if the OP hasn't done it yet. That should be his first step.
Posted on 2/25/21 at 11:21 am to greygoose
quote:
Best advice I can give is, REFINANCE THAT MORTGAGE RATE! All time lows right now, that will likely never be seen again.
I literally just closed on this house over the summer at that rate. I should look into refinancing already?
Posted on 2/25/21 at 11:22 am to TigerintheNO
quote:
That's the #1 question, if the OP hasn't done it yet. That should be his first step
I have not. 401K only.
Posted on 2/25/21 at 11:25 am to castorinho
quote:
Yeah, don't do this
Misread his post. Index funds are always best, but I assumed he wanted to take some risk like AT’s followers.
Posted on 2/25/21 at 1:36 pm to TigerintheNO
quote:
Have you opened a Roth IRA?
quote:
That's the #1 question, if the OP hasn't done it yet. That should be his first step.
Would you mind explaining why? I'm asking out of pure ignorance. The only thing I THINK I know about Roth is any money going in has already been taxed?
Posted on 2/25/21 at 1:38 pm to Pendulum
quote:
Start with ETF's for bulk of your portfolio (50% SPY and 50% QQQ for example). Then pick a handful of companies that you personally know very well as a customer or whatnot; and go through a few earnings reports...get to know the price action on these companies and responses to earnings and news, etc. That's pretty much how I started. From there, you will know what direction you want to go next. If your index etf's are doing just as well as your handpicked stocks; then put your money in index ETF's and focus on your primary income. It's not worth taking on increased risk and a 2nd job worth of hours to manage your portfolio if you cant beat QQQ. That's my personal benchmark for whether or not I'm wasting time and energy.
Very rational approach.
Posted on 2/25/21 at 1:46 pm to ChewyDante
Open up and max out, every year, a Roth IRA.
Now what you do in there? What's been said in this thread. A diversified mix of indexes, ETFs, and fixed income.
Now what you do in there? What's been said in this thread. A diversified mix of indexes, ETFs, and fixed income.
Posted on 2/25/21 at 4:52 pm to pirate75
quote:
The only thing I THINK I know about Roth is any money going in has already been taxed?
Because the Roth growth is tax free, the 401K growth tax deferred.
I recommend both, not one over the other.
401K to reduce taxable income during your working years, you pay taxes on the gains when you start taking distributions in retirement.
Roth distributions in retirement aren't taxable.
Posted on 2/25/21 at 5:26 pm to ChewyDante
I think your time would be better spent reviving HN.
Posted on 2/25/21 at 7:09 pm to Vols&Shaft83
quote:
Because the Roth growth is tax free, the 401K growth tax deferred.
I recommend both, not one over the other.
401K to reduce taxable income during your working years, you pay taxes on the gains when you start taking distributions in retirement.
Roth distributions in retirement aren't taxable
And you can only contribute into a traditional Roth IRA up to a certain income level. So do it when you're young ish.
Posted on 2/25/21 at 7:57 pm to ChewyDante
quote:By all means yes, if you can get in the 2.25 2.5% range! I have no idea what your current balance is or your payment amount, but I'm closing on my refinance on Monday. I currently have a rate similar to yours and I'm getting 2.25% on the refinance. I'm saving almost $500/month off the old payment. I'm still going to pay the old amount and just have the difference go to principal.
I literally just closed on this house over the summer at that rate. I should look into refinancing already?
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