Author Topic: Advice to your younger self?  (Read 2813 times)

futureself

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Advice to your younger self?
« on: January 29, 2019, 05:24:10 PM »
Hi dear wise Mustachians,

I am seeking wisdom as I am new to this fascinating world of acronyms of FI and ETFs.

About me: 25 year old woman working in tech, based in Ireland. I have 30K to invest, plus 15K in company stocks (tech). Additionally, 7% of my salary goes to a pension fund (that I wonít be able to access until retirement, but my employer matches the contribution so itís a nice, tax-free 2x). I seek simplicity and intend to use ETFs as a long-term investment strategy.

My questions:
i) Iím afraid of having a diversification problem and over-indexing in tech stocks if I buy a standard all world ETF (VT/VTI) - is this a legitimate thought? Which alternative ETFs would you recommend that exclude tech?

ii) I opened an account with DEGIRO to find out that several of the US ETFs are not available anymore, including VT. Given the current selection, which ETF would you recommend?

iii) Alternatively, would it be worth it to open an account with another broker (thinking of IB) given my current volume? If so, which ETFs would you recommend?

iv) Do I need to include bonds given that I already invest 7% of my salary in a non-volatile pension fund?

v) Is there any other advice that you would like to give to your 25 year old self?

Sending gratitude your way!

effigy98

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Re: Advice to your younger self?
« Reply #1 on: January 29, 2019, 06:23:08 PM »
Check out VIGI and VIG. Those are good to isolate strong established companies including growth and get rid of most high flying tech stocks. I would not have bonds at 25 and would switch to them as you near your FI date, then moving back to stocks again after you get thru the 10 years of sequence of returns risk, bigern blog talks about this.

Advice for my 25 year old self?
- 100% stock etf and make a password for my accounts I cannot remember and put the password in some place that takes me a long while to get at. If I just did this at 25, I would have retired 8 years earlier as I panicked sold twice and missed out on a lot of gains.
- Don't buy a 60k BMW to impress the ladies, stick with your paid off Honda Prelude until it dies. Better yet, live close to work and bike, rent a car when you need to go on long trips.
« Last Edit: January 29, 2019, 06:29:21 PM by effigy98 »

ILikeDividends

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Re: Advice to your younger self?
« Reply #2 on: January 29, 2019, 06:59:39 PM »
Advice to your younger self?
Dear younger self,

   This is your older self speaking.  Please store this character string in a safe deposit box:

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

In about 20 years, there will be something called, "the Internet,"  and there will also be a software tool called, "an Internet Browser."  Don't worry about what any of that means, for now.  Once you have access to the internet via said browser (you will know it when it happens), retrieve that character string from the safe deposit box, and bookmark it in your Internet Browser.  Check that bookmark every year until a "website" (another futuristic term that will become apparent once you get a "Browser") emerges that will explain everything you need to know about retiring wealthy.

That's all for now.  See you in the future.  Bring lots of money.

P.S.  Dump your Wells Fargo bank accounts; they're crooks.
« Last Edit: January 29, 2019, 08:13:01 PM by ILikeDividends »

Justin1911

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Re: Advice to your younger self?
« Reply #3 on: January 30, 2019, 01:39:34 PM »
Dear 22-year-old self (2008)

Congrats on finishing Uni and getting a job. Now start putting money in your TSP and a Vanguard Roth IRA. Don't keep all your savings in cash and end up with 100k in your checking account in 2013. Trust me.

Or if you're feeling frisky, go ahead and do the cash thing until 2013 because I know its comforting and you have a lot going on during those years. Spend it all on this thing call Bitcoin in 2013. Sell it Dec 16th 2017.

tryingtosave

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Re: Advice to your younger self?
« Reply #4 on: February 08, 2019, 02:23:14 PM »
advice to my younger self:

- please stop buying/leasing fancy cars.... in 15 years, you will look back and see how much money you have wasted and have nothing to show for it anymore. You dont need heated steering wheel, apparently they sell gloves to keep your hands warm. You dont need heated/cooled seats, your body will adjust. You dont need that 16 way power driver seat. You will find the right setting and never touch it again. You dont need that 400hp sports car, all you will get is speeding tickets and points on your license. Then you will be left with a 400hp car doing 55mph.

- please stop buying expensive clothing/sneakers/stuff/toys/etc.... again in 15 years, you will realize that its all a waste

- please stop trying to convince yourself that you can't add a few % more to your 401k every year. You really don't need the extra cash because you will just spend it anyways. Instead, keep adding to 401k until you hit the max. Then invest in something else.

- please stop putting money into savings/checking account once you have hit your emergency fund goal. Start putting the extras into an investment account. Yes its nice to see the # getting bigger and bigger, but you are missing out on all the potential growth and dividends in the market.

- please stop trying to pick individual stocks. You really are not that smart at all. Keep some playing money but otherwise dont pick stocks.

- enjoy your life now because once you have kids, you will have 0 time for yourself. Even when you do somehow find some free time, you will be too tired to do anything


nsmall

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Re: Advice to your younger self?
« Reply #5 on: February 08, 2019, 09:53:13 PM »
@futureself

You just got some killer advice

soccerluvof4

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Re: Advice to your younger self?
« Reply #6 on: February 09, 2019, 04:16:23 AM »
Dear Younger self-

- Stay single so you don't get divorced till your a bit older. Divorce is a money killer!

- Stay in the first house you bought you will save a shit load of money and its plenty big to raise a large family.

- Start invest whatever can as often as you can learning its ok to give some things up to do this and watch the magic of compounding.

 -stick with what you know in business and dont try to start all sorts of things you will be better off.

 


FI-King_Awesome

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Re: Advice to your younger self?
« Reply #7 on: February 09, 2019, 04:57:10 AM »
Not an advice, but a question... why do you want to avoid tech stocks?  Because you’re in the industry and want to diversify away from your main income stream, or because you have insight and the market will go south?

Btw, you’re here at 25.... congrats - you’ll end up “rich”.  Enjoy the ride.

chasesfish

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Re: Advice to your younger self?
« Reply #8 on: February 09, 2019, 06:07:35 AM »
Advice to my younger self?

Stop studying how to improve your investment returns.  Just buy an index fund and invest the extra time in income earning activities.  Invest the money, then watch the perpetual money making machine go to work

flipboard

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Re: Advice to your younger self?
« Reply #9 on: February 09, 2019, 07:50:10 AM »

My questions:
i) Iím afraid of having a diversification problem and over-indexing in tech stocks if I buy a standard all world ETF (VT/VTI) - is this a legitimate thought? Which alternative ETFs would you recommend that exclude tech?
I wouldn't worry about it. VT is "only" 15% tech, which really isn't huge. But: you should sell your employer stock and invest the proceeds into the diversified fund. (I'm in a similar position, I sell my stock as soon as I get it. My much more experienced manager has given me some great stories about former coworkers who kept all their tech stock, and then suffered when it inevitably dropped for a few years.)

Quote
ii) I opened an account with DEGIRO to find out that several of the US ETFs are not available anymore, including VT. Given the current selection, which ETF would you recommend?
EU regulations prevent EU residents from buying US passive products (funds/ETFs), because they require specific documentation that US funds/ETFs aren't providing (the so called PRIIPS regulation). You'll have the same problem at most other brokers, so long as they have an EU domicile (which includes IB). I don't know of any good brokers who can get around that...

VWRL (which has a few variants denominated in various currencies, but they're all the same underlying fund) is the closest equivalent to VT and is IE-domiciled, the key difference is that VWRL only has large and mid-cap, and doesn't have small-cap (perhaps you can find a second fund to add small-cap exposure).

(I'm slightly contrarian and underweight the US, so I actually buy small amounts of Europe/Pacific/Emerging market funds on top of the total-world fund - but that's only worth it if you like juggling a complicated spreadsheet every time you invest.)

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iii) Alternatively, would it be worth it to open an account with another broker (thinking of IB) given my current volume? If so, which ETFs would you recommend?
You should compare fees, and make the decision based on that. You should have access to the same funds/ETFs at IB (e.g VWRL) - as mentioned above, you won't have access to VT at IB. IB have a slightly horrible user interface (not that hard to learn though), but they tend to be cheap and offer cheap currency conversion, which can be useful if you ever need to buy a non-EUR denominated fund, or if you move, etc.

Quote
iv) Do I need to include bonds given that I already invest 7% of my salary in a non-volatile pension fund?
This is something you have to decide for yourself, but personally I wouldn't at your age, especially if the pension is non-volatile. As you get older/closer to retirement you probably would want to boost the bond percentage. However: this only works if you're sufficiently unfazed by large market drops, the typical scenario is that people overestimate their ability to survive drops, take on too much risk, and then sell when scared after a large drop. If you can avoid that, 100% stocks is fine. If not, some bonds won't harm you much.

Quote
v) Is there any other advice that you would like to give to your 25 year old self?
I'm not much older so don't have much advice...

But if you happen to be in Dublin, I hear 3fe have good coffee... But that might be bad advice, you should spend your money on investments not coffee.

bob999

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Re: Advice to your younger self?
« Reply #10 on: February 12, 2019, 03:55:09 PM »
Message to my 25 yr old self would be:

Max out Retirement accounts. (You stupid boy!!)
Start investing in index ETFs as soon as possible.
Don't pick individual stocks. You are not Warren Buffett.
Avoid MLM scheme
Don't buy a car on loan
Don't buy property until you have a family.
Read, read, read, as much as you can on investing.
Volatility is not risk.
Stocks are small pieces of businesses.
Learn value investing even if you never apply it.
Stay away from IPOs
Stay away from Casinos.
Your own home is not an investment.
Never buy a unit/apartment off the plan
The most important thing is your health. Go to the gym!!!!
Travel as much as you can.
Define your 'enough'. It will change your life.
People with big homes and fancy cars are not rich.
Best thing money can buy is your freedom.
Learn the power of compounding.
Learn the impact of 'front loading' your investments.
Rich people buy assets, middle class buy liabilities and poor people buy stuff.
An asset is something that puts money into your pocket. (a negative cashflow investment property is NOT AN ASSET)
Spend your time wisely, it is the most important commodity you have.

Some of the above I learnt from personal experience and others I learnt from observations/books.

COEE

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Re: Advice to your younger self?
« Reply #11 on: February 12, 2019, 05:30:48 PM »
Dear younger COEE -

Sleep with the girl already!
Don't buy that gigantic house in Roxborough - you'll be house poor for 8 years - and it's way too much work.
Pay off your student loans ASAP.
Keep driving the beaters - they work fine.
Spend more time with your daughter.
Drink less alcohol.
The Cubbies win the world series in 2016.

Enjoy the ride more,
Future COEE

Sorry, was there a question?
« Last Edit: February 12, 2019, 05:32:35 PM by COEE »

PDXTabs

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Re: Advice to your younger self?
« Reply #12 on: February 12, 2019, 05:53:54 PM »
Don't marry a spendthrift. Max out your tax deferred retirement accounts if at all possible.
« Last Edit: February 12, 2019, 05:58:54 PM by PDXTabs »

Duchess of Stratosphear

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Re: Advice to your younger self?
« Reply #13 on: February 13, 2019, 08:53:12 AM »
You are already so ahead of where I was at 25! My only advice to you would be that you can probably worry about this less than you are and still retire early. I think the advice to just get that 30k invested in an index fund and lose the password is the best. If I  had had that much invested before I was 30, I'd be in a way different situation now, but, unlike you, I had my head up my ass when it came to money. Keep up the good work.

theolympians

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Re: Advice to your younger self?
« Reply #14 on: February 13, 2019, 10:05:16 AM »
I'd worry less about being super-specific about investments, especially if focusing on index.

Advice to myself would be: Max out my 457 plan (past the match), fully fund traditional and Roth IRAs.

talltexan

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Re: Advice to your younger self?
« Reply #15 on: February 15, 2019, 08:23:18 AM »
When I was age 25, I learned that the most important quality of a romantic partner is reliability.

Financially, the most important thing for a 25-year-old is No Bonds in your retirement accounts, please be 100% stocks. I'm 39 now, and I have more money than I could have imagined having at 25, but I'd be even farther ahead if I could have built the psychology necessary to be 100% in stocks through the last 14 years.

BeanCounter

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Re: Advice to your younger self?
« Reply #16 on: February 15, 2019, 08:46:14 AM »
To BeanCounter 20 years ago-
-Don't use that investment guy your parents used. While he does an okay job, the fees are likely hurting your performance.  Just stick your money in index funds 85% stock fund (about 30% of which should be international) 15% bond fund and let it ride.

-Don't buy that first house. It isn't really what you guys want long term and you'd really just be better off renting a house for a few more years. The "starter home" is not really a good investment.

-You're doing the right thing by saving so much. Once your future children hit elementary/middle school you will struggle to save. Do it now.

-But at the same time, maybe use a little bit more money to do some traveling as those future children make that difficult.

-Keep working while the babies are little and not in school and you can hire great help. Once they get to be middle school aged, they don't want the nanny anymore. They need mom to help them navigate the social stuff that's hard. They need a driver. And someone to listen while handing out snacks. Be ready to retire then.

-Both of your parents will die while you are relatively young. Leaving you a pile of money to add to your already seven figure savings. Don't work so hard that you miss time with them. Take that Disney cruise with them no matter how stupid expensive it seems. It will be your last opportunity to make those memories with them and your kids.

-Just relax. It always works out somehow. You can't plan for every possibility.

Mississippi Mudstache

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Re: Advice to your younger self?
« Reply #17 on: February 15, 2019, 09:22:57 AM »
-Don't buy a house right out of college. Seriously, just don't.

-Build a tiny house. Buy a little piece of land. Live there and breathe in the freedom (from a soul-crushing underwater mortgage)

-You don't need a goddamn pickup truck. Trade it in for a Prius or a Honda Fit.

-Open a traditional IRA. Max it out.

-Go with a high-deductible health insurance plan. Open an HSA. Max that out, too.

-Read Bogle. Invest in VTSAX.

I'd be FI today if I could have given myself that advice 10 years ago.

OurTown

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Re: Advice to your younger self?
« Reply #18 on: February 15, 2019, 11:27:23 AM »
Don't marry the first wife.
While you're at it, don't marry the second wife either.
Go meet the third wife now, she is super hot and a real sweetie.
Don't wait until your late 30s to go to law school.

Rubyvroom

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Re: Advice to your younger self?
« Reply #19 on: February 15, 2019, 02:04:35 PM »
Dear younger self:

1. Please track your money, because seriously, older self really wants to know where tf it all went.
2. How about you wait another two years to buy your first house, Mrs. First Time Homebuyer, Class of 2006 /facepalm.
3. Your idea to stop investing in your 401k in 2008 because "every dollar you put in was $0.50 the next day" was truly facepunchable.
4. Throw money at the market. No really, THROW MONEY AT THE MARKET. All day every day. You literally have no idea what kind of a bull market is heading your way.
5. Don't buy that fancy ass blue car. You get rid of it 2 years later anyway.
6. Spend more time with your grandparents.

QyQ

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Re: Advice to your younger self?
« Reply #20 on: February 20, 2019, 07:01:09 AM »
I really appreciate these advices too. Im almost in the same situation as OP. Turning 27 this year. I'll make sure to stick around this forum for a long time, while I accumulate cash in my Index funds. :) Thanks all

shinn497

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Re: Advice to your younger self?
« Reply #21 on: February 20, 2019, 08:27:41 AM »
I'm 32 but id tell younger me to stay out of debt and invest as much as possible as risky as possible. Although don't do stupid things like crypto or leveraged funds.

Plugra

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Re: Advice to your younger self?
« Reply #22 on: February 24, 2019, 03:52:33 PM »
Financial advice to younger self (circa 1985):

- You're a great saver and very frugal.  Keep it up.

- Shop around on the mortgage.  The guy your realtor recommended is ripping you off and paying him a kickback, duh.

- Stop investing in balanced mutual funds, actively managed funds, funds with load fees.  There is an alternative. Look for a thing called a total stock market index fund.  Then just buy and hold through good and bad times.

- Stop taking your car to the dealership or JiffyLube or whatever.  Those people are ripping you off. Learn to change your own oil and your eyes will open.

- Forget everything your Dad told you about money and finance. He was wrong. Read a book instead.


SubL stache

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Re: Advice to your younger self?
« Reply #23 on: February 24, 2019, 08:18:28 PM »
Dear younger self,

Make a budget and actually track it.  That way you won't spend 5 years spending every dollar you made during one of the greatest bull markets of all time.  Instead you bought a bunch of shit you don't care about anymore all because you didn't want to put in the effort to be organized.