Life Situation:
Hi Folks, I’ve read the forum for a while but posting for the first time hoping you all can help me with our investment strategy! My wife and I are 28 years old (married, filing jointly) and have spent the last couple of years aggressively paying off our student loans (105k). We are finally debt free and looking to begin investing our money, now that it’s not going towards debt (FINALLY!).
We live in a HCOL area, and recognize that some of our monthly expenses are on the high side. We each own our cars (~150k miles on each), and we are looking to buy a house and start a family in the near future (within a year). We are pretty frugal but don’t have a specific investment strategy. The amount of information out there can be overwhelming so hoping to collect some information specific to our situation. I’m not necessarily looking for areas to cut monthly spending (although, feel free to offer suggestions!). I’m more so looking for some answers to some specific questions regarding investing strategies.
Monthly Gross Salary/Wages: $14k
Monthly Taxes:
Federal: $2228
State/City: $803
Soc Sec: $840
Medicare: $196
TOTAL: $4,067
Monthly Take-Home Pay (Gross - Taxes - Health/Vision/Dental/Life Insurance): $9,600
Monthly Investments:
Roth IRA: $300
403 (b): $100
Roth 401K: $1188
Employer Match on Roth 401k: $243
TOTAL: $1,831
Monthly Expenses:
Rent + Parking: $1480
Home/Rent Insurance: $9
Sling TV: $20
Car Insurance: $121
Car Maintenance, Registration, etc.: $150
Charitable contributions: $20
Clothing/Shoes: $100
Dentist: $10
Dining (Lunch/Dinner/Etc.): $270
Gifts (not charitable contributions): $100
Dry Cleaning: $8
Electricity: $56
Entertainment: $165
Fuel/Public Transport: $230
Groceries: $356
Hair Care: $12
Miscellaneous: $100
Phone (cell): $100
Gym Memberships: $189
Travel/Vacation: $300
TOTAL: $3,795
Monthly Leftover (Take Home – Current Investments – Expenses): $3,974
Current Balances:
Checking Account: $5,000
Money Market Savings: $25,000
Roth 401k: $47,000
Roth IRA and 403(b): In my wife’s name, not sure on total, but assume around $10,000 combined
Specific Question(s):
1. I’d like to open a Vanguard account and begin investing in a few index funds. What is your recommended asset allocation? Ideally, we’d like to retire by age 50. I’m assuming some mix of domestic and international stock + bonds? Any specific funds to target?
2. Should we put all of our leftover money into our Vanguard account each month?
3. Related to #2, we are looking to buy a house, which will cost us 250k-300k in our market. Is it worth saving up 20% for a down payment, or is 5% + PMI and investing, a better strategy? Similarly, do you recommend saving up our down payment money in our Money Market account (with our emergency stash) or invest it until we’re ready to buy and then pull it out?
4. How frequently do you recommend adding money to our Vanguard funds? I’ve seen suggestions vary on this.
5. Any other suggestions? Should we be putting more into my wife’s Roth IRA or my 401k?
Thank you in advance for any advice, it’s greatly appreciated!
MJD