Author Topic: Where do I go from here?  (Read 1241 times)

kyuuei

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Where do I go from here?
« on: September 01, 2016, 02:08:05 PM »
This is my first post on the forum. Lurker for a while, but really diving in now.

The TLDR: I have an IRA I like from USAA, and I dabbled in stocks (haha I have a single stock in google haha) but I'm ready to plunge much deeper in. I was thinking betterment was the way to go based on MMM, but I had some anxiety about not having 100k to drop into the bucket. Should I go with them anyways and drop a much smaller amount? I'm not well versed in this area of investing, but I'd like to get something started now.

I've been a Mustachian before this blog was ever a thing. As a child, I grew up quite poor... but I've always saved and worked hard for the money I earned. I've put myself in situations to plan for the future my whole life.. I think it's just the way I'm wired. I'm going onto 30 soon, and with many hiccups later in life, I'm ready to start investing truly.

I have a lot of things at my disposal.. the military gave me VA hospital benefits, so I don't ever have to worry about healthcare the way some people do and its fluctuating costs. I got my bachelor's degree for free, and got paid to go to school as well. I got into nursing as a career, and plan to start traveling with it so I get paid to visit new places.

I have no debts at all.. I own my car, which I bought used and keep well maintained. I travel on the cheap, and use bartering of skills to get many goods. I cook all my meals, and always have, so my food budget makes people's eyes fall out when they hear how little I spend on decent food. I don't subscribe (too much!) to consumerism mentalities. Pictures are my souvenirs for the most part. If there is a way to cut a bill in half, I find it. I'll actually be switching to google Fi once my contract with verizon is up (I know! contracts!! But, actually, it is the same price for me to go with verizon as it is to use google fi right now due to my employee discount and all of us sharing the costs of the phones.. so, actually, I pay no more or less for verizon towers as I would with google fi... I'll only transfer over to them because the phones are cheaper.)

Right now, I rent a place and it's insanely cheap for what I get. It does require a lot of hands-on maintenance, but with my long time bf/roommate and I we get it done and it's still super worth the cost. We use solar panels for some of our electricity that we got from harbor freight's super-discount-section due to returns for a solar panel breaking. We use spring water, so we only pay every so often to have the water tested. I get my clothes for free from clothing swaps with friends, and jewelry lasts me forever so I never buy new pieces. Shoes are probably my only expense, because I wear out running shoes frequently. I pay for no gym memberships and work out for free at home on youtube, I don't drink coffee, I don't smoke, I hardly drink more than a glass a month.. and my hobbies are relatively cheap and mostly consist of playing games and fitness-related activities.

I am pretty mustachian from head to toe in my lifestyle, in a world surrounded by nurses that feel they 'deserve' to eat out every shift, I cook and pack my breakfasts, lunches, and dinners for the entire week in advance. ... Yet, when it comes to investments, I feel like a normal person--that is to say, I don't really understand it. The guides I've read online don't seem to make it much clearer for me.. I feel like finding the answer to "where should I put my money so that it returns investments for me so I can retire in 10 years?" has left me feeling pretty empty-handed.

The things I am putting money into right now... I have a property picked in my hometown that I am going to purchase to use as a rental property. Even for a novice like me, I see a good deal when I see one, and this place is perfect and I respect the current owner and I think I will have no problems making returns on the property worth the mortgage. I'll continue to rent this place out as a place to live.
I also currently have 2 IRAs, though I admittedly only contribute to the roth and only have the other one because of an old job. I dabbled into stocks and quickly became lost, so I own two google stocks still. As far as investing goes, that's been about the extent of my adventures. I'm stashing money away for the down payment of the rental property, but I'm in a position now where I can really get comfortable investing as well.

It hasn't been an easy road to get to where I am at now.. but I know I'm ready to retire, and I want to give myself a 10 year mark to do it in. I want to retire by the time I'm 40. If I can retire sooner, I'd love that.

I thought betterment would be the way to go based on my novice level of investing and reviews saying they're more hands-off.. and it came recommended from MMM himself... I thought that'd be the best bet for starting out... but maybe a place like Charles Schwab might give me more insight and be able to work closely with me to help me truly see where I am at and stay on track.

Where any of you in my position? What worked for you? What didn't? Do you think my plan so far sounds like a good one?

Thank you all in advance for any input. :) I appreciate it.

4alpacas

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Re: Where do I go from here?
« Reply #1 on: September 01, 2016, 02:21:59 PM »
I would recommend reading Jim Collins' stock series and the archives of the Mad FIentist
http://jlcollinsnh.com/stock-series/
http://www.madfientist.com/archives/

Depending on your income, I would max out your 401k, then IRA.  After the tax sheltered investment accounts, I would recommend index funds through Vanguard.

neo von retorch

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Re: Where do I go from here?
« Reply #2 on: September 01, 2016, 02:44:31 PM »
Betterment
The Good
You could get started today, use their wizard to categorize your goal(s) and all you do is connect your bank account, transfer money in, and let them do their magic.
It's fast, it's easy, it's relatively low cost.
Your taxable investments will likely get some benefit from tax-loss harvesting that you're less likely to do on your own.
You don't need $100k - even $10k will get you to the 0.25% pricing tier, and even short of that you're at 0.35%.

The Bad
You don't have to learn more, so you might not.
That 0.35%-0.15% is on top of fund expenses, so it's more expensive than DIY 3-fund Vanguard portfolios.
You don't have control over your asset allocation. You sort of do, as in you can see "stocks / bonds" ratio - but you don't really control whether it's domestic or international, or if you wanted to includes REITs or anything else that you might prefer to do.

Vanguard
This is a solid option, and it really doesn't have to be complicated.
1) Look up making an Investor Policy Statement on BogleHeads.com and write your own. Keep it SIMPLE. (i.e. 3 or 4 funds total!)
2) Hook up your bank account, transfer money in, buy the funds you decided on in the ratio you decided on. (If you're opening both taxable and tax-advantaged, try to put dividend generating funds more in tax-advantaged, i.e. your bond funds.)
3) Keep transferring money in, buying the funds, maintaining the ratio.
4) Once a year re-balance if need be, ideally just by buying more of the asset(s) that are below their target ratio.