Author Topic: Need some final words of advice  (Read 1992 times)

Fantasticmrfox

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Need some final words of advice
« on: April 13, 2018, 02:37:53 AM »
Hey Mustachians,

I have finally saved up enough and done the research into which brokerage and which stocks to invest in. I just need some final words of advice before taking the plunge.

I am a 29-year-old South African living in the UAE. I currently save between 55-60% of a decent monthly income, I have no debts and no property. I want to achieve FI within 10 years. Although, this may be problematic given the oft-mentioned impending crash.

I plan to invest 80% of my portfolio in VTI, due to its slightly greater diversification compared to VOO, and 20% in BND for "safety/stability". Is this wise for now?

As this is my 1st time investing I will have to put in 10k US. What I'm wondering is, and I already know what you all will say but will ask it anyway for comfort sake, should I wait for the markets to become more stable and invest in gold or BND for now?

I am using Interactive Brokers (IB) for their low cost, they have been referred by many Mustachians.

Any final words of advice would be greatly appreciated.

SwitchActiveDWG

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Re: Need some final words of advice
« Reply #1 on: April 13, 2018, 05:22:44 AM »
If I were you I’d invest 100% in VTI (or VTSAX it’s fund equivalent) and skip the bonds at your age.

Timing the market is a gamblers game. Get the money in as soon as you can.

For reference I am 28 and my asset allocation is
70% in VTSAX
30% in VTIAX (total international index)

So I am 100% in equities.
« Last Edit: April 13, 2018, 05:27:37 AM by SwitchActiveDWG »

alanB

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Re: Need some final words of advice
« Reply #2 on: April 13, 2018, 06:16:30 AM »
In the case of someone who is young and owns property with a low mortgage rate it makes no sense to own bonds (right now).  Since you have no property, I guess it would make some sense to hold bonds to limit your risk somewhat.  Keep in mind that risk is just standard deviation of return, so that could work for you or against you while you are saving.  Since your FI date is 10 years away you will probably be fine 100% equities.  If you are going to save up to buy property you might want a slightly safer allocation depending on the timing.

If you want more diversity there is always more real estate (beyond the portion in VTI) or corporate bonds or more concentrated international funds & international bonds. 

Don't buy gold.

CorpRaider

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Re: Need some final words of advice
« Reply #3 on: April 13, 2018, 06:23:59 AM »
If you are worried about volatility, maybe dial down your stocks, but not to zero. I would try and remember your cash is virtually guaranteed to lose out to inflation over time.
« Last Edit: April 13, 2018, 06:27:22 AM by CorpRaider »

MustacheAndaHalf

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Re: Need some final words of advice
« Reply #4 on: April 13, 2018, 06:33:35 AM »
If you could only buy one Vanguard ETF, I would suggest Vanguard Total World ("VT") which holds stocks from every country at market weights.  Roughly half of it is US stocks, so it overlaps with your existing plan but diversifies you a bit more.

Just curious - I assume Vanguard lacks a branch in UAE.  Are you using "Interactive Brokers" or some other discount brokerage to make your investments?

Heckler

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Re: Need some final words of advice
« Reply #5 on: April 13, 2018, 08:25:49 AM »
I would diversify globally.  I am diversified globally.

Fantasticmrfox

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Re: Need some final words of advice
« Reply #6 on: April 14, 2018, 04:54:16 AM »
Thank you so much!

Ok, so go 100% equities and diversify globally. So VTI, or VT? VTI is 93.3% US whereas VT is only 50.2% US. I understand VT gives me more diversity at a slightly higher cost. Personally, I like the diversification. The USA has had greatest gains in recent years, which could mean slowed future growth, but that's just a guess.

Annual dividends for VTI are 2.37 USD while VT is 1.57 USD.

Half of you say VTI whilst the other half says VT. At least I've narrowed it down to 2. Any final words? Will read more and make a decision.

Thanks again.


sokoloff

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Re: Need some final words of advice
« Reply #7 on: April 14, 2018, 05:57:44 AM »
Dividend yield is what matters, not the absolute payout per share. (If the shares prices are the same, then you could directly compare using either; since they’re not, using the yield to compare makes it easy and apples to apples.)

For someone living in the US, I could make a case that a higher US weight is more appropriate as more future expenses will be in that currency and market and VTI already has a lot of economic exposure outside the US. For someone livingoutside the US and with no plans to retire into the US, I’d be more inclined to go more international.

Either one will crush the outcome you’ll get from further indecision and analysis, of course.

“Act and invest” beats “hold cash”. VT is probably a better fit than VTI for you.

Fantasticmrfox

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Re: Need some final words of advice
« Reply #8 on: April 14, 2018, 11:57:33 AM »
Thank you so much, Sokoloff! I really, truly, appreciate your advice. Will finalise the live trading account with IB this week and invest in VT.

Looking forward to becoming a true Mustachian!

imolina

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Re: Need some final words of advice
« Reply #9 on: April 14, 2018, 11:10:44 PM »
I also live in the UAE and I opened an account with IB for trading. I would recommend you to check SimplyFI UAE group on facebook and Andrew Hallam website. I think VT is not recommended for non-US citizens as you have to pay estate taxes on your assets in USA over 60K so it better to invest in funds domiciled in other countries. We own VWRD instead.

BTDretire

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Re: Need some final words of advice
« Reply #10 on: April 17, 2018, 02:01:02 PM »
Doing the investment is the important thing!
What ever you pick won't be perfect, but don't let that slow you.

Interest Compound

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Re: Need some final words of advice
« Reply #11 on: April 17, 2018, 09:32:25 PM »
Follow imolina's lead. Much of the advice on this forum might not apply to someone based in the UAE. You have local currency and tax law to consider. I independently did a quick search and SimplyFi looks to be a great resource for you:

https://www.simplyfi.org/

Good luck, and let us know what you find!

PocketChange

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Re: Need some final words of advice
« Reply #12 on: October 03, 2018, 12:52:47 AM »
Hi there,

I am in exactly the same position as your first post! 29, from South Africa, working in the UAE. Please tell me what did you finally decide on doing, how has it been? Any advice will be greatly appreciated. I am very keen to start a proper investment and compound it into FI.

Thanks in advance.