Author Topic: Not sure where to start?  (Read 237 times)

CletusVanDamme

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Not sure where to start?
« on: October 11, 2018, 11:23:31 AM »
Hello All,
Thank you in advance for any help and/or advice.  I have been lurking and I am interested in FIRE and I believe I have convinced my better half.  I have two challenges that I need help with:

1.) I don't know what to do
2.) I am a financial idiot

Let me set the stage for you all.  At a high level, my wife and I have been blessed (and work our butts off) with some success with our careers.  Our current net worth is ~$2.2M and we are in our mid forties (don't tell her I said that).  We have no debt except for our house which we keep on purpose (Home is worth $1.4 million and we don't want to sink all of our cash into it yet...basically treating our mortgage like rent).  We live in NJ and have very high taxes (we pay ~$34K per year in real estate taxes for example) and will most likely want to move in the next couple of years to a smaller house and use the equity to roll into that house to avoid any capital gains. 

In terms of our net worth, it is split between home equity, IRA's, market investments (managed by our money guy), maxed out company 401K's, college savings and cash.  We have done angel investing in 3 companies but we treat that money like it doesn't exist since it is high risk.  Anyway,  my issue at the moment is that my cash ($340K) is sitting in a savings account when it could be out there working hard for me.  Problem is I just don't know where to put it at the moment.  Now with that said, my objective is to start to create some income stream(s) where I can start to live off of it when we downsize our house and budget with a goal of being FIRE in next five years.  The two areas of investment for this cash I have been contemplating are index funds or a rental property.  But I am open to other ideas.

So...if you were me, where would you invest?

Thank you
CVD

Rob_bob

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Re: Not sure where to start?
« Reply #1 on: October 11, 2018, 04:55:22 PM »
Well if I were you I would probably invest like me hahaaa :)

How long before you want to retire?  That makes a difference between growth or income investing.

Some say that you invest for growth/total return.  Share value goes up, sell shares to provide income.  Others say invest for income, low share value growth and take dividends for income and keep your shares.

Or you can do both, a portion of your portfolio is invested in growth as an inflation hedge the rest in income producing investments.  This is what I do.  Growth side is in large, mid and small cap blend ETF's.  Income is in REITs, preferred and utility ETF's, CEF's and a few individual stocks.  Plus some cash in CD's and T-Bills.

e34bb098

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Re: Not sure where to start?
« Reply #2 on: October 11, 2018, 04:58:27 PM »
I'd start with tracking your expenses, if you aren't already.  How much does it cost you to live in a given year?  Month?

Once you know your expenses, you'll know how much you need to support yourself.  Then you can start chipping away at unnecessary expenses.