I've recently joined the MMM community, and want to get aggressive with my investments. I've started a journal
HERE to try to keep myself on track.
I'm hoping to gain some advice on my current 401k, ESPP, and non-existent stock purchase strategy to help boost my portfolio and start down the FIRE path. I've been fairly hands-off on my investments, as I have little understanding of them. I'm open to suggestions of books or resources to boost my knowledge.
I am currently contributing 10% to my 401k, 5% to traditional, 5% to a Roth 401k. My company contributes $.050 to each dollar, up to 6% of my contribution. The account has done fairly well since 2009, and I'm currently sitting at roughly $115k. My 401k plan is through Schwab, and this is the mix they provided for my medium-to-high risk plan:
11% - Harbor Capital Appreciation Instl
23% - Vanguard Institutional Index I
13% - Vanguard Windsor II Admiral
5% - Artisan Mid Cap Value Investor
4% - Morgan Stanley Inst Small Co Gr IS
9% - Vanguard Small Cap Index Adm
5% - American Funds Europacific Growth R6
5% - Lazard Emerging Markets Equity Instl
12% - Vanguard Total Intl Stock Index Admiral
5% - PIMCO Total Return Instl
8% - Vanguard Total Bond Market Index Adm
By asset class this works out to:
Large Company - 47%
Small/Mid Company - 18%
Itnl/Global - 22%
Bonds - 13%
I also contribute 6% of my salary to my company's employee stock purchase program (hosted through Etrade). Our plan gives a 15% discount to quarterly stock allotments, pricing based on the lower of the first or last day of the quarter. I have typically set my shares to sell once the stock gains me about 25-30% over the discounted rate, when it bumps up 2-3 times a year. From my very basic understanding of things, after capital gains, this still nets me a decent return on my money. Up until now, though, I've simply been moving that cash from the sell over into my savings account (last I looked it was at a whopping .05%).
Planning my FIRE plan, I know I should be contributing as much as possible to my 401k. While I have been searching for a new job with a higher salary, I am hoping for a pay bump in a few months at my current place, and I plan to move that directly toward my contribution. My wife is also supposed to get a raise this year, and since she doesn't contribute to any investments, we may use that extra as well. I'd love some feedback on the current plan and allotment.
I like the discount from the ESPP, and would like to use that money more wisely. If I wanted to just begin using that money to purchase, say, shares in a nice Vanguard index, can I simply transfer the money within Etrade after my stock sell to purchase those shares, or is there there a technique or process to get into the index fund?
Once I begin purchasing stocks, and get into sizable dividends, my understand is that rolling that income back into the purchase cycle is another good way to grow. Is there a strategy to this, and what are the implications, good or bad?
I have a great CPA I've been using since we purchased our rentals, and I know he can provide guidance, but I'm open to any advice for avoiding tax pitfalls with diving further into the investment world.
I appreciate all the information I'm finding here, and hope to use your advice to learn and grow within this community. Thanks!