Author Topic: 27 yo about to invest for the first time...what should I pick?  (Read 1428 times)

L14

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27 yo about to invest for the first time...what should I pick?
« on: November 10, 2016, 03:47:19 AM »
Hello Mustachians!

I found the blog earlier this year and really want to get started on early retirement!  I have already hit some big milestones such as becoming debt free last spring and significantly increasing my savings contributions, with the goal of it eventually reaching 50%.  As of right now I have 10K in cash savings and 10% going towards traditional TSP (currently active duty military).

The next big step I see is to start investing, but my question is, which fund?! From reading the MMM and the jlcollinsnh blog, it looks like the best options are VTSAX, VTSMX, and possibly betterment?  Not sure where to go from here and what is the best choice.

Any guidance would be much appreciated!

GrOW

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Re: 27 yo about to invest for the first time...what should I pick?
« Reply #1 on: November 10, 2016, 04:09:43 AM »
I think that you will find that investing is mostly about avoiding bad choices and building on very good choices. You already have very good choices already in mind. I wouldn't stress much over what is the best choice.

Also, since you are in the early part of the accumulation stage, I think that you will find investment performance will have a relatively small impact on your annual net worth growth. Your goal of 50% savings rate will have a much much much bigger impact.

While you are working your way to that awesome goal of 50%, you will find what investment mix works best for you.

mgarf

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Re: 27 yo about to invest for the first time...what should I pick?
« Reply #2 on: November 10, 2016, 07:45:06 AM »
1. 80% VTSMX (VTSAX when you get enough money) and 20% VGTSX (VTIAX when you get enough money)

2. Try to keep these proportions through time.


As for betterment.... If you absolutely don't wanna deal with buying funds... they're an ok option... but it's so easy (you only need to worry about two funds!) and you will save money by just going it alone.
« Last Edit: November 10, 2016, 07:47:49 AM by mgarf »

Car Jack

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Re: 27 yo about to invest for the first time...what should I pick?
« Reply #3 on: November 10, 2016, 07:59:13 AM »
Your TSP already IS investing, so you're further along than you think.  For your money to help you the most, you want to max your tax advantaged accounts.  Do you have a Roth IRA?  If your income qualifies for a Roth, you should be opening an account and filling that up.

As far as where to open an account for a Roth or for a taxable account, Vanguard is no longer the lowest cost alternative.  Over the last year, while Vanguard has been drowning in customer service nightmares, their competitors have been lowering their fees on index mutual funds and ETFs.  Don't get me wrong.....Vanguard got all this low price stuff started and the others have followed and now passed them.  But you can easily choose mutual funds at Fidelity that mirror Vanguard and with enough of an initial investment, they'll pay you a bonus for opening the account.  If you want to go the ETF route, Schwab has options that are lower than anyone and they'll also pay you a bonus to open the account.  I've got accounts at Vanguard, Fidelity and Schwab, so am not biased one way or another, but I do see what's going on between them all.

Stick with an overall 3 fund portfolio (US Stock, International stock, US bond) with an asset allocation across ALL of your accounts to match your target and be SURE you're in low cost indexes with no transaction fee and you'll be good to go.