Author Topic: Reader Case Study - Investment Questions  (Read 1609 times)


  • 5 O'Clock Shadow
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  • Posts: 2
  • Age: 30
  • Location: Wisconsin
Reader Case Study - Investment Questions
« on: December 21, 2016, 09:57:08 AM »
Hello all,

I'm pretty new to this whole mustachian thing, but I have always dreamed of being able to live my life comfortably and have the freedom of not working 40 hrs a week. Now that I realize this is more attainable than I thought, I am determined to make it happen. I do have some questions though so I thought I would give some details about my current situation and try and get some answers and direction. I'm 24 years old/young. I just bought my house earlier this year. It's a big enough house even for an eventual family and I got a good deal on it. I only paid about 63,000 for it. It's in pretty good shape and I'm pretty handy so I can fix stuff up as I go. I work as an environmental specialist at an engineering firm and currently make about 28-30k a year after taxes (it's my first year here.) but shortly (within a year or two) I should be up to around 40 and I will have annual wage increases of at least about 3% after that. I currently pay 8% into my 401k account and my employer matches 50% up to 4% (so 2% total). I've done some calculations and I think that if I raise this amount to 15% my long term portfolio should be in a comfortable range even if I shoot for retirement at like 35 or 36. I know for a fact that I can live on 25-30k a year because I'm currently doing it. So without a mortgage that should be easy. I have targeted a 600k to 700k nest egg for this long term portfolio. I have taken into account that contributions will stop at 35 or 36 but what's in there after that will continue to grow until when I can start using it. One of my first questions is how should I arrange the investments in my 401k for this plan? They are currently split into about thirds in low, medium, and slightly higher risk investments because I hadn't thought about early retirement at the time of setting it up. There is one option that uses mainly the S&P 500. Should I be putting most money into that one? I'm fairly new to investing.

I also have some credit card debt that I'm currently paying off. It totals about $8000 at fairly high interest rates and as soon as I can find a low interest consolidation loan I will likely do that to save in interest. And I have one student loan for about $7000. I have a dependable fuel efficient car that's already payed off. I've recently cut my spending way down to about as low as I can currently go on my budget (following much of the advice on this blog) and i am planning on targeting the credit card debt as hard as I can. I should probably leave the 401k at 8% until I accomplish this right? I am likely going to find a room mate soon and I will be able to make a decent amount of money off of that. My current house payment is only $550 for mortgage, taxes, and insurance.

My other main questions have to deal with my early retirement portfolio as opposed to the one I can start using at 59.5.  What's the best way for me to tackle the investments that need to get me from 35/36 to 59.5? And how much do I need for this since it can run out as long as I can make it to 59.5? And should these investments be all/mostly in the vanguard index funds or are there other better options? I'm not against working a little bit or having my own business after retirement but I would like to keep it minimal. Any advice on what to do here would be greatly appreciated as, again, I don't have much investing experience. Thanks a lot!

« Last Edit: December 21, 2016, 10:25:01 AM by tommyboy1 »