Guidance needed on DIY investments

[AliInKY]

Hi all,

I've read with interest this thread in the forum:  https://forum.mrmoneymustache.com/welcome-to-the-forum/do-you-regret-paying-off-your-mortgage-early/

We're in a position to pay off our mortgage but waffle back and forth on whether to do so.  Peace of mind?  Yep, let's totally do it.  But what if we want to downsize or relocate in 10 years?  And we're missing opportunities to make our money work for us.  Let's assume we are not paying off the mortgage early AND we are maxed on 401K and IRA contributions...

I'm completely intimidated by the thought of doing any investing on my own.  Even after reading MMM forums and blog articles for a couple of years, I'm still not sure where to begin, or how to move forward.  How do i make the best choices for investing our money and growing it?   

Experienced guidance would be much appreciated.

Ali

[KTG]

If you don't know a lot about the market or dont have the time and energy to follow individual stocks, a pretty safe place is to just buy into an ETF like VOO or VTI. The are diversified and easy to follow. If at a later time you want to invest slowly in a individual company with a small amount, thats fine, but I would keep most of your money in an ETF, or a few different ones.

[NoStacheOhio]

What funds do you use in your IRAs? Any reason you wouldn't want to use the same funds in a taxable account?

[Frankies Girl]

If you don't know a lot about the market or dont have the time and energy to follow individual stocks, a pretty safe place is to just buy into an ETF like VOO or VTI. The are diversified and easy to follow. If at a later time you want to invest slowly in a individual company with a small amount, thats fine, but I would keep most of your money in an ETF, or a few different ones.

ETF (exchanged traded funds) are actually pretty intimidating to a new investor. Mutual funds are way easier to understand since they're not as complicated and certainly much easier and most everyone that does index investing uses mutual funds like VTSAX.

I personally see no reason to use ETFs ever for a basic index investor. There are advantages to them, but they're not a need for lazy portfolio investors. Why complicate things when there's a much easier/same benefits option?



OP - I'd suggest you read Jim Collins' stock series: http://jlcollinsnh.com/stock-series/ (it is available as a book as well).

But it's pretty easy:

1. Get a basic understanding on how the market/investing works: read the series above, and check out the Bogleheads wiki. https://www.bogleheads.org/wiki/Main_Page

2. Figure out your IPS (investment policy statement). This is your blueprint on the why/how/when for your life/future.
https://www.bogleheads.org/wiki/Investment_policy_statement

3. Figure out your asset allocation (AA) based off your IPS and your own comfort levels.
https://www.bogleheads.org/wiki/Asset_allocation

4. Figure out what accounts you have to work with, and apply your AA to them as a whole. Here's a great list of "lazy" portfolios you can use to set things up. https://www.bogleheads.org/wiki/Lazy_portfolios

5. Once the IPS and investments are figured out, you can then also see that mortgage payoff fits with your future goals, your risk level comforts, etc... Conservative goals, then maybe paying off the mortgage is right for you. Realize you're comfortable with being more aggressive now that you understand how the market works, and you have stable jobs that mean you can pay the mortgage easily as it stands? Then that's your path...


And of course, ask questions here. There are no dumb questions - there are always folks here willing to help you understand how things work, whether this or that choice might be good or bad, how to do things with a mind for taxes... it may seem quite intimidating at first, but I promise if you can read things and ask questions when you hit a snag, you're going to figure this stuff out and it is really mind-blowing when it finally clicks for you.*


While I personally wouldn't pay off my mortgage unless it was crazy high interest rates, for you, that may be the right move. The debate over mortgage/invest is endless. But once you figure out the investing part and decide your IPS/AA and move forward on that, you can then decide (based off of your goals and future and such) whether to pay off the house, invest the whole nut, or a split down the middle. It all makes sense once you go through those steps...



*I am the poster child for going from OMG this stuff is too scary... to now being 100% confident in managing my own stuff. If I could do it, anyone can. Good luck!!

[NoStacheOhio]

I personally see no reason to use ETFs ever for a basic index investor. There are advantages to them, but they're not a need for lazy portfolio investors. Why complicate things when there's a much easier/same benefits option?

They're great for when you're below the minimum for the better share classes

[soccerluvof4]

If you don't know a lot about the market or dont have the time and energy to follow individual stocks, a pretty safe place is to just buy into an ETF like VOO or VTI. The are diversified and easy to follow. If at a later time you want to invest slowly in a individual company with a small amount, thats fine, but I would keep most of your money in an ETF, or a few different ones.

ETF (exchanged traded funds) are actually pretty intimidating to a new investor. Mutual funds are way easier to understand since they're not as complicated and certainly much easier and most everyone that does index investing uses mutual funds like VTSAX.

I personally see no reason to use ETFs ever for a basic index investor. There are advantages to them, but they're not a need for lazy portfolio investors. Why complicate things when there's a much easier/same benefits option?



OP - I'd suggest you read Jim Collins' stock series: http://jlcollinsnh.com/stock-series/ (it is available as a book as well).

But it's pretty easy:

1. Get a basic understanding on how the market/investing works: read the series above, and check out the Bogleheads wiki. https://www.bogleheads.org/wiki/Main_Page

2. Figure out your IPS (investment policy statement). This is your blueprint on the why/how/when for your life/future.
https://www.bogleheads.org/wiki/Investment_policy_statement

3. Figure out your asset allocation (AA) based off your IPS and your own comfort levels.
https://www.bogleheads.org/wiki/Asset_allocation

4. Figure out what accounts you have to work with, and apply your AA to them as a whole. Here's a great list of "lazy" portfolios you can use to set things up. https://www.bogleheads.org/wiki/Lazy_portfolios

5. Once the IPS and investments are figured out, you can then also see that mortgage payoff fits with your future goals, your risk level comforts, etc... Conservative goals, then maybe paying off the mortgage is right for you. Realize you're comfortable with being more aggressive now that you understand how the market works, and you have stable jobs that mean you can pay the mortgage easily as it stands? Then that's your path...


And of course, ask questions here. There are no dumb questions - there are always folks here willing to help you understand how things work, whether this or that choice might be good or bad, how to do things with a mind for taxes... it may seem quite intimidating at first, but I promise if you can read things and ask questions when you hit a snag, you're going to figure this stuff out and it is really mind-blowing when it finally clicks for you.*


While I personally wouldn't pay off my mortgage unless it was crazy high interest rates, for you, that may be the right move. The debate over mortgage/invest is endless. But once you figure out the investing part and decide your IPS/AA and move forward on that, you can then decide (based off of your goals and future and such) whether to pay off the house, invest the whole nut, or a split down the middle. It all makes sense once you go through those steps...



*I am the poster child for going from OMG this stuff is too scary... to now being 100% confident in managing my own stuff. If I could do it, anyone can. Good luck!!

^+1 across the board except not knowing your entire financial situation I am one that believes in paying your mortgage off. But as I said , hard to know when dont know your net worth/expenses etc......

[surfhb]

Jim Collins' book sums up how anyone should be investing pretty well.    Read it twice.   

[KTG]

ETF (exchanged traded funds) are actually pretty intimidating to a new investor. Mutual funds are way easier to understand since they're not as complicated and certainly much easier and most everyone that does index investing uses mutual funds like VTSAX.

VTSAX is a available as a mutual fund AND ETF. So now you are confusing things for our OP even more.

https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT&ps_disable_redirect=true

[Bourbon]

Hello fellow Kentuckian.

As I began investing and had no clue what to do, I had only heard to diversify so I picked a random sampling of funds from our 401K offering that had recent good performance.

It wasn't the most effective.  I echo what others have said, read JLCollins stock series.

It essentially boils down to buying the whole market.  You can't(and fund managers can't) reliably pick who is going to go up and down over long periods.  So instead you buy a fund(like VTSAX) that is primarily the SP500, but also some small and mid cap stocks.  It gives you a reasonably approximation of the US stock market.  Over the long term, you expect this to reliably go up.  You just have to stay invested, even when it gets scary.  That's the mantra.

[AliInKY]

Thanks, everyone, for all the input.  Frankie's Girl - Special thanks to you for the detailed reply.  Looks like I have some reading to do... 

[Classical_Liberal]

Jim Collins' book sums up how anyone should be investing pretty well.    Read it twice.

If you have an inkling you may not be the type of investor that can just shrug off massive losses (ie the type Collins says you should be).  Take a look at Tyler's site and read some of his stuff on basic passive portfolios.