Author Topic: Advice?! Blank slate 26-year-old trying to save, compound, invest  (Read 5452 times)

sillyspends-n-sortasaving

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Oh fair money-wise people out there, can anyone spare some healthy advice on fattening the savings account and investment income for a 26 year old?  I review many forums and listen to YouTube videos regarding finances, but I struggle to apply the long-term ideals or lifestyle planning concepts to my life. i.e. I do not have a mortgage, I do not have children, and I have minimal monthly expenses.

Here is my situation: I only recently started a real career with a 50k salary.  I have been living at my parents home for the last year and a half and have only managed to put away about $15,000 (by the end of this month), while also maxing out my ROTH IRA for the past two years.  I have had the ROTH IRA through EJ since maybe 2010?  But before two years ago barely contributed anything.  I also put 6% of each paycheck into my ROTH 401k through work.  I do not think I can live at home for too much longer, but I am milking it while I can.

I have a long term goal of owning a home but being able to put 50% down.  I would like to get there sooner than later, so I am considering taking up a part-time or flexible hour job to fatten up my savings account.  Also, housing in the Seattle area is ridiculous so this goal does move further and further out of reach.  Nonetheless, I would rather put a good percentage down and hold little debt than jump into something big.

Aside from purchasing my own home, I also have a goal of traveling a lot (someday).  It would be ideal for me to establish investments or some other sort of platform where I can retire somewhat early and also travel.  It is hard for me to imagine what I need to retirement per month since I have never had any mortgage/long-term rental expenses or other lifestyle costs.  I don't have any debt or wild monthly expenses, so I'd like to consider my situation as a blank slate.

So wise ones, if you had a blank slate, what would you do?


The only somewhat proactive idea I have it so move some of my savings into a 1% APR online banking account.

Metric Mouse

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #1 on: October 24, 2016, 12:03:15 AM »
Why buy a house? If you need to get away from the 'rents for awhile, it would probably be a better plan to rent something for a year or two.  If your expenses are low, now is the time to set habits of saving - sock away everything you can. That way when expenses do rise, you're not cutting savings to pay for them.  The more you save now, the more compound interest works in your favor!

sillyspends-n-sortasaving

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #2 on: October 24, 2016, 12:23:03 AM »
Why buy a house? If you need to get away from the 'rents for awhile, it would probably be a better plan to rent something for a year or two.  If your expenses are low, now is the time to set habits of saving - sock away everything you can. That way when expenses do rise, you're not cutting savings to pay for them.  The more you save now, the more compound interest works in your favor!

Well, the relationship with the parents is copasetic for now.  I can agree with renting an apartment for a year, but the cost of a studio in Seattle is about that of a house payment, so I worry about looking back on that and regretting renting for so much.. I suppose if I find a place that is worth it then that is just part of growing up? Meh, I will avoid it as long as I can haha

ooeei

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #3 on: October 24, 2016, 07:12:11 AM »
I would get my IRA away from Edward Jones as fast as possible, and transfer it to Vanguard, Fidelity, or Schwab.

An apartment may cost as much as a mortgage payment on a house, but did you also factor in insurance, property tax (both underestimated greatly in my area by Zillow), opportunity cost of the down payment, and repairs?

If I was making $50k a year I wouldn't be putting money into the Roth 401k at work, I'd be using the traditional at least until I got down to the 15% bracket. 
« Last Edit: October 24, 2016, 07:14:16 AM by ooeei »

BTDretire

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #4 on: October 24, 2016, 10:08:19 AM »
I would get my IRA away from Edward Jones as fast as possible, and transfer it to Vanguard, Fidelity, or Schwab.

+1 to Vanguard, Fidelity, or Schwab and away from Edward Jones.
 I would say drop it in VTSAX or the equivalent non Admiral shares VTSMX,
if it was long term retirement money.
But, you need to think about your time frame to buy a house,
if that's is what you want to do. If the time frame is short,
you might not want the short term market risk. Five or ten years
might be OK.
 Re: the house, how about an apartment with roomates.

Scandium

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #5 on: October 24, 2016, 10:17:54 AM »
I would get my IRA away from Edward Jones as fast as possible, and transfer it to Vanguard, Fidelity, or Schwab.

An apartment may cost as much as a mortgage payment on a house, but did you also factor in insurance, property tax (both underestimated greatly in my area by Zillow), opportunity cost of the down payment, and repairs?

If I was making $50k a year I wouldn't be putting money into the Roth 401k at work, I'd be using the traditional at least until I got down to the 15% bracket.

This.
1) get out of EJ
2) You're likely better of with a regular 401k for the tax savings.
3) cost of homeownership is much more than just the mortgage. Property taxes alone is 25% of my mortgage check each month ($500 of $2k). And expensive maintenance/replacements can be a real drag. Before committing to a house at least rent for a year to learn an area.

TexasRunner

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #6 on: October 24, 2016, 11:55:00 AM »
You've gotten good advice on the investment / which-firm-to-use side of this discussion. (Avoid EJ like the plague)

As far as housing, do you have specific figures?  Example apartments?  Example houses?  Also, are you considering having a roommate?  That is one of the primary things that makes renting so cost-effective.

sillyspends-n-sortasaving

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #7 on: October 24, 2016, 09:06:49 PM »
You've gotten good advice on the investment / which-firm-to-use side of this discussion. (Avoid EJ like the plague)

Okay, interesting to hear from a few people that EJ should be avoided.  So I got started through EJ with a $5,000 gift, which is why I kept contributing to it.  I don't even know what the repercussions would be to moving that money out and about.. On another note, I have supplemental trust income that has been building for about a decade now and that cannot be touched for a few more years.  I get a little say in how aggressive that account is but also not really since it is being controlled by family.

So here's another concern, I put 6% of each paycheck into the ROTH 401K at work, but maybe I can contribute more like 10% per paycheck and either reduce my EJ contribution per month or just do one check at the beginning of the year.  Also, work will contribute about 6% each year.

I am honestly just so ignorant about the tax benefit of one account or the other.  Maybe I should move all my 401k contributions through my employer into the traditional 401k?

I am so lost.

Heckler

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #8 on: October 24, 2016, 11:57:37 PM »
You are not lost!  At 26 with this amount of savings, you are miles ahead.  You just think you're lost because none of your peers are up there with you.  Keep it up and you'll be set.

ooeei

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #9 on: October 25, 2016, 06:37:36 AM »
You've gotten good advice on the investment / which-firm-to-use side of this discussion. (Avoid EJ like the plague)

Okay, interesting to hear from a few people that EJ should be avoided.  So I got started through EJ with a $5,000 gift, which is why I kept contributing to it.  I don't even know what the repercussions would be to moving that money out and about.. On another note, I have supplemental trust income that has been building for about a decade now and that cannot be touched for a few more years.  I get a little say in how aggressive that account is but also not really since it is being controlled by family.

So here's another concern, I put 6% of each paycheck into the ROTH 401K at work, but maybe I can contribute more like 10% per paycheck and either reduce my EJ contribution per month or just do one check at the beginning of the year.  Also, work will contribute about 6% each year.

I am honestly just so ignorant about the tax benefit of one account or the other.  Maybe I should move all my 401k contributions through my employer into the traditional 401k?

I am so lost.

If you want to get actionable recommendations instead of ideas, here are mine:

  • Call Vanguard and ask them how you can transfer your IRA from EJ to them.  Put it in VTSAX (or VTSMX if you have less than $10,000).  This is 100% stocks, so it will swing up and down a bit, but as long as you don't need the money for 10+ years or so you'll be fine.
  • Change your 401k to traditional from now on.  Leave your current amount where it is.  Post the investment options, along with their expense ratios (you may have to open up each prospectus to get this info) in this thread and we'll tell you which one is a good choice.  If you want more info on why the traditional is better, this website is good:  http://www.madfientist.com/traditional-ira-vs-roth-ira/ (it's talking about IRAs, but 401ks work the same).  You could also make another thread asking for a comparison between the two, and I'm sure you'd get some detailed answers.
  • Read http://jlcollinsnh.com/stock-series/ when you get a chance.  1-2 articles a day is plenty.
  • Continue contributing at least up to the match at your 401k, max the Roth IRA (at Vanguard, not EJ), and whatever's left can go into your house fund.   
  • Personally I wouldn't want to buy a house at 26 (I'm 27, and still don't) to keep career flexibility, but you may have a different plan.  I've seen too many friends blow a ton of money buying/selling houses to recommend it.  If I was buying a house, I would put 20% down, even if I had 50%, and invest the remainder.  That's a decision you can make later, since you're not too close to buying yet.
  • You're doing great already, these are just recommendations to help you do BETTER.
« Last Edit: October 25, 2016, 06:40:55 AM by ooeei »

Spitfire

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #10 on: October 25, 2016, 11:58:08 AM »
In terms of housing, don't forget to take commuting time/cost into consideration. If you work in downtown Seattle, for example, take that into account when you look at rents there vs 1 hour away. I'm not sure how the public transportation is there, but if it's good you may even be able to go without a car.

Ftao93

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #11 on: October 25, 2016, 12:05:58 PM »
You've gotten good advice on the investment / which-firm-to-use side of this discussion. (Avoid EJ like the plague)

I am so lost.

Quite the opposite!  At 26 you've got as much savings as I do, make not much less, and are saving at a good rate.  I'm 40 and only about in the same spot.  You're doing fine.

You can probably leave most things where they are, just adjust it so that most of your savings goes into your 401k first.  That will likely reduce your tax burden by a good chunk.  If it's left over at the end of the year, you can put that into your roth.  Or just blow it on tacos!

Seriously, your instincts are already getting you faaaar ahead of a lot of folks.  Just be patient, read up, and don't try to drink the entire ocean at once.

TexasRunner

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #12 on: October 25, 2016, 01:00:25 PM »
The BASE reason we are adverse to Edward Jones (the same as almost all financial institutions) is that they push actively managed funds and funds with higher expense ratios than what you can get at Fidelity or Vanguard, and sometimes push products that are not appropriate for everyone (such as annuities with investment arms).

ALL of my stock is currently in an account with a 00.035% expense fee--->  As in 0.35$ of every 1000$ invested. 

There is vast documentation on this forum and several others about how this changes the ultimate health of a portfolio over the (very) long run. 

As such:  Investing is good!  Investing with EJ or Lynch or others is good (provided you know what you want/need and aren't taken advantage of)!  Investing in index funds is VERY good!

Hope that helps clear it up.  :)

Radagast

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #13 on: October 25, 2016, 02:18:28 PM »
You've gotten good advice on the investment / which-firm-to-use side of this discussion. (Avoid EJ like the plague)

Okay, interesting to hear from a few people that EJ should be avoided.  So I got started through EJ with a $5,000 gift, which is why I kept contributing to it.  I don't even know what the repercussions would be to moving that money out and about.. On another note, I have supplemental trust income that has been building for about a decade now and that cannot be touched for a few more years.  I get a little say in how aggressive that account is but also not really since it is being controlled by family.

So here's another concern, I put 6% of each paycheck into the ROTH 401K at work, but maybe I can contribute more like 10% per paycheck and either reduce my EJ contribution per month or just do one check at the beginning of the year.  Also, work will contribute about 6% each year.

I am honestly just so ignorant about the tax benefit of one account or the other.  Maybe I should move all my 401k contributions through my employer into the traditional 401k?

I am so lost.
I think getting out of Edward Jones is a pretty big priority. This is a firm that could potentially reduce annual compounding by around half. Meaning 5%-->2.5%. That is a huge impact. Ending that is something that is better the sooner you do it.

I agree with ooeei about choosing a simple 100% stock index fund, though I suggest the Total World stock index fund over US only (that being said, US only stock index will be 500% better than Edward Jones in terms of how much money you end up with, while total world stock index may only take that to 525% better).

I think that at $50,000 per year and single I would use traditional IRA and traditional 401k to lower my marginal tax rate.

If you continue on your current course you will eventually be ok. However, the next step is to max out the 401k (unless it is through EJ or otherwise totally sucks) and look into HSA's if you have the right insurance. Or take other actions to increase the amount of money you have working for you (real estate, side job, etc.).

sillyspends-n-sortasaving

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #14 on: October 25, 2016, 11:20:54 PM »

[/quote]
I think getting out of Edward Jones is a pretty big priority. This is a firm that could potentially reduce annual compounding by around half. Meaning 5%-->2.5%. That is a huge impact. Ending that is something that is better the sooner you do it.

I agree with ooeei about choosing a simple 100% stock index fund, though I suggest the Total World stock index fund over US only (that being said, US only stock index will be 500% better than Edward Jones in terms of how much money you end up with, while total world stock index may only take that to 525% better).

I think that at $50,000 per year and single I would use traditional IRA and traditional 401k to lower my marginal tax rate.

If you continue on your current course you will eventually be ok. However, the next step is to max out the 401k (unless it is through EJ or otherwise totally sucks) and look into HSA's if you have the right insurance. Or take other actions to increase the amount of money you have working for you (real estate, side job, etc.).
[/quote]

Okie dokie, so I sort of half ass monitor my assets via Personal Capital and then also logging online and checking in.  Since I was a so-so contributor to my EJ account (which apparently I started in late 2012) I have contributed more than 15k and got a return of just $1,300, personal rate of return just a tad of 4.5%.  Now I am not feeling so great.  We also just sold pretty much everything I had and moved into "more competitive funds."

The idea of trying to move everything from EJ makes me nervous because I am just not knowledgeable enough yet to manage everything myself.  I've got some studying to do!

Now, I do feel like I have more control over my accounts through my employer because I can easily change things myself.  Maybe I can start there and make better contributions to the traditional 401k.


sillyspends-n-sortasaving

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #15 on: October 25, 2016, 11:29:31 PM »
You've gotten good advice on the investment / which-firm-to-use side of this discussion. (Avoid EJ like the plague)

Okay, interesting to hear from a few people that EJ should be avoided.  So I got started through EJ with a $5,000 gift, which is why I kept contributing to it.  I don't even know what the repercussions would be to moving that money out and about.. On another note, I have supplemental trust income that has been building for about a decade now and that cannot be touched for a few more years.  I get a little say in how aggressive that account is but also not really since it is being controlled by family.

So here's another concern, I put 6% of each paycheck into the ROTH 401K at work, but maybe I can contribute more like 10% per paycheck and either reduce my EJ contribution per month or just do one check at the beginning of the year.  Also, work will contribute about 6% each year.

I am honestly just so ignorant about the tax benefit of one account or the other.  Maybe I should move all my 401k contributions through my employer into the traditional 401k?

I am so lost.

If you want to get actionable recommendations instead of ideas, here are mine:

  • Call Vanguard and ask them how you can transfer your IRA from EJ to them.  Put it in VTSAX (or VTSMX if you have less than $10,000).  This is 100% stocks, so it will swing up and down a bit, but as long as you don't need the money for 10+ years or so you'll be fine.
  • Change your 401k to traditional from now on.  Leave your current amount where it is.  Post the investment options, along with their expense ratios (you may have to open up each prospectus to get this info) in this thread and we'll tell you which one is a good choice.  If you want more info on why the traditional is better, this website is good:  http://www.madfientist.com/traditional-ira-vs-roth-ira/ (it's talking about IRAs, but 401ks work the same).  You could also make another thread asking for a comparison between the two, and I'm sure you'd get some detailed answers.
  • Read http://jlcollinsnh.com/stock-series/ when you get a chance.  1-2 articles a day is plenty.
  • Continue contributing at least up to the match at your 401k, max the Roth IRA (at Vanguard, not EJ), and whatever's left can go into your house fund.   
  • Personally I wouldn't want to buy a house at 26 (I'm 27, and still don't) to keep career flexibility, but you may have a different plan.  I've seen too many friends blow a ton of money buying/selling houses to recommend it.  If I was buying a house, I would put 20% down, even if I had 50%, and invest the remainder.  That's a decision you can make later, since you're not too close to buying yet.
  • You're doing great already, these are just recommendations to help you do BETTER.

Oh my goodness this just eased my mind a lot.  I can fix my 401k contributions through work tomorrow and get that changed by this or next paycheck.  I will try to make time to call Vanguard soon, but I want to feel knowledgable too.  Thank you for the resources!  I look forward to learning more.  I need to ease my worries.

sillyspends-n-sortasaving

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #16 on: October 25, 2016, 11:31:49 PM »
You've gotten good advice on the investment / which-firm-to-use side of this discussion. (Avoid EJ like the plague)

I am so lost.

Quite the opposite!  At 26 you've got as much savings as I do, make not much less, and are saving at a good rate.  I'm 40 and only about in the same spot.  You're doing fine.

You can probably leave most things where they are, just adjust it so that most of your savings goes into your 401k first.  That will likely reduce your tax burden by a good chunk.  If it's left over at the end of the year, you can put that into your roth.  Or just blow it on tacos!

Seriously, your instincts are already getting you faaaar ahead of a lot of folks.  Just be patient, read up, and don't try to drink the entire ocean at once.

I love that, "don't try to drink the entire ocean at once."   Definitely how I feel when I get thinking about this!  I will try to focus and knock out one issue at a time.

ooeei

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #17 on: October 26, 2016, 07:02:01 AM »
Okie dokie, so I sort of half ass monitor my assets via Personal Capital and then also logging online and checking in.  Since I was a so-so contributor to my EJ account (which apparently I started in late 2012) I have contributed more than 15k and got a return of just $1,300, personal rate of return just a tad of 4.5%.  Now I am not feeling so great.  We also just sold pretty much everything I had and moved into "more competitive funds."

The idea of trying to move everything from EJ makes me nervous because I am just not knowledgeable enough yet to manage everything myself.  I've got some studying to do!

Now, I do feel like I have more control over my accounts through my employer because I can easily change things myself.  Maybe I can start there and make better contributions to the traditional 401k.

Don't be nervous about moving everything from EJ, you would have a hard time doing worse than they are.  Read this: http://jlcollinsnh.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/  and do what he recommends, or do the fund I recommended above.  You may later find out it's not EXACTLY what you want, but it'll be a hell of a lot closer than Edward Jones and their crazy fees.

I get that you don't want to make the wrong decision by moving to the wrong place, but by not making a decision, you're making the decision to invest at EJ, which is worse than just about anything you'll get at Vanguard Fidelity or Schwab. 
« Last Edit: October 26, 2016, 07:04:15 AM by ooeei »

sillyspends-n-sortasaving

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #18 on: October 26, 2016, 12:14:24 PM »
You've gotten good advice on the investment / which-firm-to-use side of this discussion. (Avoid EJ like the plague)

Okay, interesting to hear from a few people that EJ should be avoided.  So I got started through EJ with a $5,000 gift, which is why I kept contributing to it.  I don't even know what the repercussions would be to moving that money out and about.. On another note, I have supplemental trust income that has been building for about a decade now and that cannot be touched for a few more years.  I get a little say in how aggressive that account is but also not really since it is being controlled by family.

So here's another concern, I put 6% of each paycheck into the ROTH 401K at work, but maybe I can contribute more like 10% per paycheck and either reduce my EJ contribution per month or just do one check at the beginning of the year.  Also, work will contribute about 6% each year.

I am honestly just so ignorant about the tax benefit of one account or the other.  Maybe I should move all my 401k contributions through my employer into the traditional 401k?

I am so lost.

If you want to get actionable recommendations instead of ideas, here are mine:

  • Call Vanguard and ask them how you can transfer your IRA from EJ to them.  Put it in VTSAX (or VTSMX if you have less than $10,000).  This is 100% stocks, so it will swing up and down a bit, but as long as you don't need the money for 10+ years or so you'll be fine.
  • Change your 401k to traditional from now on.  Leave your current amount where it is.  Post the investment options, along with their expense ratios (you may have to open up each prospectus to get this info) in this thread and we'll tell you which one is a good choice.  If you want more info on why the traditional is better, this website is good:  http://www.madfientist.com/traditional-ira-vs-roth-ira/ (it's talking about IRAs, but 401ks work the same).  You could also make another thread asking for a comparison between the two, and I'm sure you'd get some detailed answers.
  • Read http://jlcollinsnh.com/stock-series/ when you get a chance.  1-2 articles a day is plenty.
  • Continue contributing at least up to the match at your 401k, max the Roth IRA (at Vanguard, not EJ), and whatever's left can go into your house fund.   
  • Personally I wouldn't want to buy a house at 26 (I'm 27, and still don't) to keep career flexibility, but you may have a different plan.  I've seen too many friends blow a ton of money buying/selling houses to recommend it.  If I was buying a house, I would put 20% down, even if I had 50%, and invest the remainder.  That's a decision you can make later, since you're not too close to buying yet.
  • You're doing great already, these are just recommendations to help you do BETTER.

Oh my goodness this just eased my mind a lot.  I can fix my 401k contributions through work tomorrow and get that changed by this or next paycheck.  I will try to make time to call Vanguard soon, but I want to feel knowledgable too.  Thank you for the resources!  I look forward to learning more.  I need to ease my worries.

Update: Work contributes 6% and those contributions are vested after 3 years of employment here.  I have contributed 6-7% each paycheck, having changed everything going to traditional and moved my contributions to Roth, and perhaps now back to traditional.

I have the following investments:

  • Fixed Income:
    Templeton Global Bond R6 = 5%
    Vanguard Inglation Protection Sec = 10%
  • Large Cap Equities:
    American Funds AMCAP R6 = 10%
    MFS Value R6 = 20%
    • Mid Cap Equities:
      JP Morgan Mid Cap Value I = 10%
      Jarus Enterprise N = 5%
    • Small Cap Equities:
      Vanguard Small Cap Index Instl = 10%
    • International:
      EuroPacific Growth R6 = 10%
      Harbor International = 20%

    Prospectus attached as image.


ooeei

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #19 on: October 26, 2016, 01:55:31 PM »
Personally I'd go 100% in the Vanguard Instl Index, or maybe have 10% in the Inflation Protected Securities.  You could add in some mid and small cap if you want to simulate the total market, but it probably won't change much.  I'd definitely get out of the stuff with expense ratios over .10%.

tldr:  100% Vanguard Instl Index

NorcalBlue

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #20 on: October 26, 2016, 08:09:05 PM »
1.  Read JLCollins Stock Series:  http://jlcollinsnh.com/

2.  Read JLCollins Stock Series again (with emphasis on the first 6-7 articles)

3.  Skip the house.  Read the article on the JLcollins site about why a home is a horrible investment: http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/.  There's a common misconception about a house being a wonderful investment.  It's not.  GoCurryCracker and other Early Retirement blogs will tell you why.

4. Profit

In all seriousness, I'd pay 6 figures for the simple knowledge (and the discipline to execute it) that Mr. Collins so beautifully articulates in his stock series.  Simple, to the point and it will make you a very rich man if you follow it.

Good Luck to you - If I would have found and followed Mr. Collins advice when I was your age, I'd be worth triple what I am now.
« Last Edit: October 26, 2016, 08:23:51 PM by NorcalBlue »

kpd905

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #21 on: October 27, 2016, 06:36:52 AM »
I would either put everything in the Vanguard institutional index (that's what I do with my 401k), or put it in the Vanguard Target Retirement 2055 fund.

If you go with the Target retirement fund, you can roll your IRA to Vanguard, put it all in the same fund, and not have to worry about your allocation ever again.


zephyr911

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #22 on: October 28, 2016, 12:09:17 PM »
SPU grad here. Not living nearby now, but still have family and friends there. As long as the market stays as hot as it is, buying is a questionable call. Maybe, maybe not. Just don't get fixated on it as your only path forward.

Also, why 50% down?

sillyspends-n-sortasaving

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #23 on: October 29, 2016, 12:43:51 AM »
SPU grad here. Not living nearby now, but still have family and friends there. As long as the market stays as hot as it is, buying is a questionable call. Maybe, maybe not. Just don't get fixated on it as your only path forward.

Also, why 50% down?

Well hey there zephyr911!  I agree on the questionable market.  I also feel the future of the local economy is questionable, so I am attempting to financially prepare myself for that.  I would prefer to buy a home outright, so I guess 50% is just a baby step goal.

zephyr911

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #24 on: November 02, 2016, 12:49:05 PM »
Well hey there zephyr911!  I agree on the questionable market.  I also feel the future of the local economy is questionable, so I am attempting to financially prepare myself for that.  I would prefer to buy a home outright, so I guess 50% is just a baby step goal.
All else being equal, nobody wants mortgage debt. But since all else is never equal, and opportunity cost is a thing, letting all that cash pile up without earning any real return for as long as it would take to save up 50% of even the cheapest, shittiest dwelling in your area, comes at a huge cost. So, even if you stay stuck on that 50% down payment, at least invest the money somewhere it'll earn something for you.

Most people here don't strive for anywhere past 20% down, unless they're gearing up for actual retirement and already have most/all of their income requirements taken care of. Paying off the house is great when you're not striving to maximize returns, but until then? Make sure you do the math.

sillyspends-n-sortasaving

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #25 on: November 10, 2016, 12:06:34 PM »
Well hey there zephyr911!  I agree on the questionable market.  I also feel the future of the local economy is questionable, so I am attempting to financially prepare myself for that.  I would prefer to buy a home outright, so I guess 50% is just a baby step goal.
All else being equal, nobody wants mortgage debt. But since all else is never equal, and opportunity cost is a thing, letting all that cash pile up without earning any real return for as long as it would take to save up 50% of even the cheapest, shittiest dwelling in your area, comes at a huge cost. So, even if you stay stuck on that 50% down payment, at least invest the money somewhere it'll earn something for you.

Most people here don't strive for anywhere past 20% down, unless they're gearing up for actual retirement and already have most/all of their income requirements taken care of. Paying off the house is great when you're not striving to maximize returns, but until then? Make sure you do the math.

Zephyr911, all of that is good to hear and a great recommendation.   Okay, okay, I will try to let the money I am setting aside pile up.  I was considering transferring 10k of emergency funds into Ally bank and knowing that it will slowly grow but still be there if i need it.

sillyspends-n-sortasaving

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #26 on: March 09, 2017, 06:36:27 PM »
Hello Mustachains,

Since my initial post here I have made the following changes:

1.  Moved everything from Edward Jones to Vanguard and have maxed out my Roth IRA for 2017, pushing the balance over 24k. The issue here is that I have not exchanged my mutual funds, so my Vanguard account looks like the attached screenshot.

2.  I moved my savings into an Ally online savings account and intend on letting the 10k sit there as long as I can.

3.  I am maxing out my HSA at work with each paycheck.  I need to wait until May for the balance to be large enough to invest, but HealthEquity just switched over to Vanguard options, so I am excited for those.

4.  I am maxing out my 401k at work, but had to change my contribution to 40% per paycheck.

I know I should do something with my Vanguard account.  It makes me nervous to move everything into VTSAX.  Any suggestions on what to do with that 25k?



Oh fair money-wise people out there, can anyone spare some healthy advice on fattening the savings account and investment income for a 26 year old?  I review many forums and listen to YouTube videos regarding finances, but I struggle to apply the long-term ideals or lifestyle planning concepts to my life. i.e. I do not have a mortgage, I do not have children, and I have minimal monthly expenses.

Here is my situation: I only recently started a real career with a 50k salary.  I have been living at my parents home for the last year and a half and have only managed to put away about $15,000 (by the end of this month), while also maxing out my ROTH IRA for the past two years.  I have had the ROTH IRA through EJ since maybe 2010?  But before two years ago barely contributed anything.  I also put 6% of each paycheck into my ROTH 401k through work.  I do not think I can live at home for too much longer, but I am milking it while I can.

I have a long term goal of owning a home but being able to put 50% down.  I would like to get there sooner than later, so I am considering taking up a part-time or flexible hour job to fatten up my savings account.  Also, housing in the Seattle area is ridiculous so this goal does move further and further out of reach.  Nonetheless, I would rather put a good percentage down and hold little debt than jump into something big.

Aside from purchasing my own home, I also have a goal of traveling a lot (someday).  It would be ideal for me to establish investments or some other sort of platform where I can retire somewhat early and also travel.  It is hard for me to imagine what I need to retirement per month since I have never had any mortgage/long-term rental expenses or other lifestyle costs.  I don't have any debt or wild monthly expenses, so I'd like to consider my situation as a blank slate.

So wise ones, if you had a blank slate, what would you do?


The only somewhat proactive idea I have it so move some of my savings into a 1% APR online banking account.

DavidAnnArbor

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Re: Advice?! Blank slate 26-year-old trying to save, compound, invest
« Reply #27 on: March 09, 2017, 09:03:47 PM »
It's always going to feel nerve wracking to put a whole chunk of money in the stock market, but plunging in is the best way to get started. VTSAX is diversified as possible at the lowest cost.