Author Topic: Brand New Here! Should I Start Investing Now?  (Read 595 times)

ilovescotch

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Brand New Here! Should I Start Investing Now?
« on: March 16, 2017, 07:29:07 PM »
Hi all. 33 yo w/ wife, 2 kids, committed financial suicide all through my 20's and now just waking up. Spent the last 5 years building a business. I'm finally making money on it. In 2015, my income was $50,000, this year, I'm projected to make $90,000 (my income, not the biz). We are a SINGLE INCOME family. Moving from LA to Dallas this year for cheaper COL, real estate, and business climate! But should I start investing right this second?

VTSMX is basically at its highest in a very long time! I've never invested a cent outside of the Roth IRA's I setup this year, and I am essentially clueless. Is it wise to buy in right now? I want to learn!

The big issue: My wife and I have $80,000 of student loan debt that we need to pay off.

What are your thoughts? I am just now getting completely fuckin serious about my financial future and I want to do the best by my family. Can you help?

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1153

Tom Bri

  • Pencil Stache
  • ****
  • Posts: 526
  • Location: Small Town, Flyover Country
  • More just cheap, than Mustachian
Re: Brand New Here! Should I Start Investing Now?
« Reply #2 on: March 16, 2017, 08:27:46 PM »
Just a question, would re-investing in your own business be the way to go?

Putting your money in stocks or whatever is probably a lot safer than putting everything back into your own business, but that is an emotional decision you have to make. How safe is your business? Is it in a field that has sharp downturns sometimes? How skilled is your competition?

I have no answers and am a novice investor myself.

L.A.S.

  • 5 O'Clock Shadow
  • *
  • Posts: 71
Re: Brand New Here! Should I Start Investing Now?
« Reply #3 on: March 17, 2017, 06:36:34 AM »
You haven't really given enough info for anyone to say one way or another.

Do you have a few months cash set aside?
What is the rate on your loans?  What is your pay-down plan for them? Paying down debt is the economic equivalent of investing, with your after tax return being the interest rate of the loan.
I 2nd the question as to whether or not it's better to reinvest in your business.  It seems to be growing.  What is the return on invested capital in your business?   Could you buy out a partner?
You're moving.  I did that a few years ago, and it requires liquidity.  Don't tie up all your cash while you are moving, or about to be moving.

Perhaps while you figure these things out, you could work on the habit of saving.  Set up a monthly direct withdrawal from your everyday bank account to an online savings account that you don't check often. A good starting mustachian level would be 20-25% of your monthly take-home, but anything is a start.  This will force you to live below your means.  If you absolutely need the money over the next year as you move, its not tied up in some investment.  Once you get settled, you can invest what has accumulated towards the best use of your funds, be it back into your business, paying off moving expenses, student loans, or opening an investment account. 

Definitely also check into setting up a retirement plan for yourself through your business.

talltexan

  • Bristles
  • ***
  • Posts: 462
Re: Brand New Here! Should I Start Investing Now?
« Reply #4 on: March 17, 2017, 07:28:20 AM »
First, identify what your living expenses are. Then re-invest enough in the business to maintain it at a size in which you can generate 2.5X those.

Then live on X, while saving 1.5X in VTSAX; if you get the numbers to this point, it will take you 10-11 years to build up a passive retirement stache. That is the mustachian way.

ilovescotch

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Brand New Here! Should I Start Investing Now?
« Reply #5 on: March 17, 2017, 12:38:54 PM »
Thanks a lot guys. This is good stuff.

Read investment order - very helpful and I have bookmarked this post to reference.

We are a digital design/development studio. We have been growing nicely, but can't grow too fast since myself and biz partner are the only ones in the co and we have our hands on every project - we can't take on more work than we can physically work on. But our biz goal is to grow to the point of being able to hire an employee in the next year. Reinvestment in the biz would certainly help us get there.

The loans are around 5%. I would really love to get these out of the way permanently and not have to think about them anymore.

First, identify what your living expenses are. Then re-invest enough in the business to maintain it at a size in which you can generate 2.5X those.

Then live on X, while saving 1.5X in VTSAX; if you get the numbers to this point, it will take you 10-11 years to build up a passive retirement stache. That is the mustachian way.


I am definitely going to be working on this. Life goal has been defined. Thank you!