Beginner looking for beginner advice

[Ahughes]

Hi everyone,

I'm April and I'm looking for some very basic and beginner advice. I've tried searching in the threads but couldn't find what I was looking for and skimming through the 500 plus pages seems daunting at best. But I imagine these questions might get asked a lot, if my questions have already been answered somewhere else please point me in the right direction!

First question:
What books and resources do you recommend for learning about vanguard specifically and also some about investing generally?
I just subscribed to two podcasts The Mad Fientist and Choose FI.

Second Question:
I have money in savings that I'm wanting to invest, but I don't know if or how much I should keep on hand. Is there a general rule for this?

For me specifically I have 9k in savings, and my kiddo has about 2k that I'd also like to invest for him (I have a CD but if I can earn a higher interest rate with no risk I feel that would be better for him.)
I'm currently unemployed and in the process of learning how to become a digital marketer so that I can work from home. I've filed for unemployment but it is now week 13 or 14 and I still don't know if they are going to approve my claim.

3rd Question:
Is it a good practice to divide up your total amount available for investing into different funds?
Say I invested the 9k is it better to put it all in one, or is it better to divide it into 3K and divide into 3 separate ones?

4th Question:
Is there a minimum requirement of how much to invest, or could you put 50 dollars into one account?

5th and Final Question:
I started the process of creating an account on vanguard but was unsure of how to answer some of the questions.
Like what type of account to open?
Why are you investing? retirement, general savings, education
Primary and secondary Investment Objective? capitol preservation, income, growth, speculation

Thank you for help!

[shuffler]

Read this:  https://jlcollinsnh.com/stock-series/

[draco44]

1. Start here:
- https://jlcollinsnh.com/stock-series/ (website), The author also wrote a book called The Simple Path to Wealth
- Your Money or Your Life (a book on general mindset of how to value your time and money)
- The Bogleheads' Guide to Investing (book)

2. We need more info on your overall financial situation to give personal advice. Start here: https://forum.mrmoneymustache.com/investor-alley/investment-order/
If you are currently unemployed, I'd keep a big cushion of money in cash/saving account.

3. People have different philosophies on this. Read the Stock Series link I provided above first. Also try searching this forum or Bogleheads for "asset allocation." If you are investing in index funds, as is par for the course around here, be aware that even a single fund is pretty well diversified.

4. This varies by the investment company/bank you open an account with. Here's Vanguard's breakdown: https://investor.vanguard.com/mutual-funds/fees. Often there is a requirement to make a larger initial investment, then you can add smaller amounts after that. For example, you may have an initial required investment of $1000 to buy Vanguard Target Retirement Funds. Forever after that initial purchase, you could deposit $1, $50, or whatever smaller amount you feel like.

5. Are you asking whether to open a traditional IRA vs. a Roth IRA? Read this: http://www.bitchesgetriches.com/investing-deathmatch-traditional-ira-vs-roth-ira/ As someone who may have lower income, I'm guessing you might be well served by a Roth IRA.

[Frankies Girl]

Hi April!

If it was me, you are unemployed so I would not be investing anything until you have a steady paycheck coming in. Keeping your savings in a CD or high interest (ha about the "high interest" as right now there aren't many great rates but still) savings account makes more sense to me personally. You do not want to invest and have to sell off in a month or two because you need emergency funds. So for myself I'd consider that 9K my emergency fund for now and work hard at reducing expenses to the bone and finding a decent paying job ASAP.

A few recommendations for general financial/investments below.


general investing/financial management
In no particular order:

https://www.etf.com/docs/IfYouCan.pdf
^short read, but applying the moves and reading the "homework" will require more time and thought over the next few weeks/months.

https://jlcollinsnh.com/stock-series/
This is the blog his book "The Simple Path To Wealth" is based on. Some of the information may be dated as it is closing in on a decade old when he began to write the blog, and the book is now a few years old, but for the most part this is still a solid, clear and easy to understand instruction manual and I highly recommend his writing.*

https://www.bogleheads.org
^index investing - the bible for DIY to set it and forget it investing. Some highlights:

https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy

https://www.bogleheads.org/wiki/Asset_allocation

https://www.bogleheads.org/wiki/Investment_policy_statement

https://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/

https://forum.mrmoneymustache.com/investor-alley/investment-order/



Most of the other questions:

It would likely be really helpful for you to post a case study since details are going to hinge on more information than you've provided. We can't tell you "invest this way" or what we'd do since all we know so far is you have ~9k, no idea what your age/plans are, you have a kid of indeterminate age as well with a small amount to possibly invest but no statement about what for/plans for them either, and that you are currently unemployed. There's a whole lot more to your story I'm sure and we would need to see it to give you real actionable instruction/advice. :)

https://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/




*I am the Frankie's Girl he's quoting on his page - I credit his blog and book as being instrumental for my financial instruction and am a huge fan. I went from zero knowledge and being scared AF at the idea of investing at all to the point I thought I'd need a pro forever, to being totally chill about doing the whole DIY thing and advising others in some small way. IT CAN BE DONE. And FYI, I'm an arty type (artist/illustrator/designer) so don't let anyone tell you you need a math brain for getting good with money/investing. If I can do this, YOU CAN DO IT!!

[ctuser1]

4th Question:
Is there a minimum requirement of how much to invest, or could you put 50 dollars into one account?

I wanted to address this specific part.

This depends on brokerage and fund. I opened a brokerage account for my pre-teen daughter at Fidelity and she invests in the fidelity mutual funds. There she can invest very small amounts. I think the minimum is $5 or so.

If you try to purchase vanguard ETF from third parties, it may be more difficult. e.g. I know I can't do that purchasing VT at Merrill.

I am not sure if Vanguard allows investing such small sums if you open a brokerage directly there. Perhaps you should call them and ask directly.

[Zamboni]

Books

My favorite book for getting start is Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School by Andrew Hallam. My local library had a copy.

I think that is the best one to read first, and I think it has the best investment advice (couch potato for the win!), and I've read most of the books in this area including some very dense ones on methods like momentum investing.

Another really good one for getting started saving is The Automatic Millionaire by David Bach. He got me started paying myself first, and he streamlined my filing. He's written a whole series of books, but they are all basically the same.
Here's a goofy animated summary of the idea:
https://www.youtube.com/watch?v=_5OKZhAiJmQ

[RWD]

5th and Final Question:
I started the process of creating an account on vanguard but was unsure of how to answer some of the questions.
Like what type of account to open?
Why are you investing? retirement, general savings, education
Primary and secondary Investment Objective? capitol preservation, income, growth, speculation

You may find it useful to read about the different account types on Vanguard's site:
https://investor.vanguard.com/investing/investment-accounts

You can invest in a number of different types of "buckets" (e.g. IRA, 401k, 529, brokerage, etc.) and each has its own advantages and disadvantages. You may not be eligible for some types of accounts. Moving funds out of a given bucket will usually have some restrictions and/or taxes associated with it.

I agree with @draco44 that you probably want to open a Roth IRA (would be categorized under "retirement" for the investment reason). For a kid you may want to choose "education" as the reason to get to the 529 option. Your investment objectives should probably be income/growth but I don't think what you choose when setting up the account really matters. The investment order post (as already mentioned in this thread) gives a good idea of the order you should prioritize filling your available buckets.

[Ahughes]

Thank you everyone for your help and the resources shared. I'm going to put it to good use and I will write out a case study.

To answer some of the questions, I'm 32, a single parent. Currently unemployed due to the covid/school situation. My son is 5, and I opted to homeschool him instead of doing the remote learning, or dealing with the masks and social distancing requirements when schools do reopen. (I feel like my kiddo would always be in trouble just for being a kid) Previously I worked for the school district and also a school for kids who have emotional and behavior disorders. Worst case scenario I can go back to work for the schools, but currently I'm trying to learn digital marketing so I can work from home and continue to homeschool my son.

Overall I want to reach a gross income goal of 4k a month with digital marketing, and invest my savings so that my dividends will grow. I have a car payment of 282.83 that I'm planning to put a good chunk of my tax return towards the principle and then possibly refinance for a lower interest rate if possible (I currently owe 16,600 on it.) My plan is that as the dividends grow, say like consistent 100 a month, that would be less hours that I have to work to reach 4k a month.

But again I'll complete a case study and absorb all the information and resources that you all of kindly shared with me! Thank you so much!

[Linea_Norway]

About your cash cushion, that depends on how many costs you usually have. If you have a child, a car and your own house, you might want to have a big cushion, maybe 6 months pay. The idea is to have some money at hand in case you get some big expenses all at once so that you can survive without taking up debt. Therefore, as long as you are out of work, keep your cash, as you already are in that special situation.

You probably know that stockmarkets will go up and down, and historically up again. You don't want to be forced to sell during a down period. That is why you should only invest money that you don't need immediately, but that you can miss for 5 or 10 years.

[Ahughes]

Thank you again everyone, I have been reading the stock series and I just completed a case study and added it to that forum/thread. Its titled " I want FI, but I need to be pointed in the right direction" I'd link it here but I don't know how yet.
Again thank you so much for the resources, I'm learning a lot!

[draco44]

Nice work! I'm sure there's a fancier way to link to your case study, but this'll do: https://forum.mrmoneymustache.com/case-studies/case-study-i-want-fi-but-need-to-be-pointed-in-the-right-direction/