Author Topic: How much to invest into stock market for my situation???  (Read 1345 times)

Happyfatherof2

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How much to invest into stock market for my situation???
« on: April 21, 2019, 08:33:31 AM »
Hi!
Iím completely debt free finally :)
I maximize Roth IRA and invest about $300/week into a taxable account.
I also have an emergency savings fund.
Question 1: letís say our  monthly expenses is about $3k and we have $5k leftover. Should I just invest all $5k into stock market (taxable account)?

Let me know what your thoughts are please!!!!

I want to be FI as soon as possible but I still plan on working

waltworks

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Re: How much to invest into stock market for my situation???
« Reply #1 on: April 21, 2019, 09:55:52 AM »
Hi!
Iím completely debt free finally :)
I maximize Roth IRA and invest about $300/week into a taxable account.
I also have an emergency savings fund.
Question 1: letís say our  monthly expenses is about $3k and we have $5k leftover. Should I just invest all $5k into stock market (taxable account)?

Let me know what your thoughts are please!!!!

I want to be FI as soon as possible but I still plan on working

Read the investment order post here: https://forum.mrmoneymustache.com/investor-alley/investment-order/

Short answer: yes.

-W

Happyfatherof2

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Re: How much to invest into stock market for my situation???
« Reply #2 on: April 21, 2019, 02:11:15 PM »
Ok! Then I plan on using betterment
What do you think is a good allocation.
Iím 40. Want to be FI in 5-7 years.

70/30
80/20
90/10?

degrom7

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Re: How much to invest into stock market for my situation???
« Reply #3 on: April 21, 2019, 06:03:06 PM »
Are you putting money in your 401k? Instead of betterment, you can just put it in a low cost index fund at Vanguard.


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Happyfatherof2

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Re: How much to invest into stock market for my situation???
« Reply #4 on: April 21, 2019, 07:44:54 PM »
I donít have a 401, but rather Roth IRA
And I maximize my contributions in my Roth with vtsax
So Iím not really sure how much and what allocations for general taxable account

MustacheAndaHalf

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Re: How much to invest into stock market for my situation???
« Reply #5 on: April 21, 2019, 08:03:23 PM »
What benefits do you see with paying Betterment's 0.25% annual fee?

You can't use tax loss harvesting in an IRA or 401(k) account.  If you want simple handling on automatic, without thinking about it, you can buy a target date fund (Vanguard, Fidelity, Schwab all have them).  Those funds include U.S. stocks, international stocks, and bond allocations.

I suspect you could buy "Vanguard Target Retirement 2025" (or 2030) and have everything handled for you for a lower fee.

Happyfatherof2

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Re: How much to invest into stock market for my situation???
« Reply #6 on: April 21, 2019, 08:17:30 PM »
Yes that is correct, I am not going to use betterment for my tax advantage accounts.
I am wondering about my general taxable account. I thought maybe betterment might be a good option in my taxable account for its automatic rebalancing and tax loss harvesting
My Roth is 100% vtsax
For my taxable account are you saying to just go with target date fund?
My taxable account is more my concern, since it will be much larger amount and have most of my funds.
My tax advantaged accounts I maximize but I started late, so the amount will not be as large as my taxable account
I plan on investing about 5k/month to my taxable account - which is where I need some help

Andy R

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Re: How much to invest into stock market for my situation???
« Reply #7 on: April 21, 2019, 10:11:51 PM »
Ok! Then I plan on using betterment
What do you think is a good allocation.
Iím 40. Want to be FI in 5-7 years.

70/30
80/20
90/10?

5-7 years is a very short time and compounding will not have much of an effect. If you run the numbers, the expected gain with 90/10 vs 70/30 will be very small, so your upside is small, but you still face the bigger downside, so it doesn't make much sense to me to have a higher allocation.

I really do suggest you go and run the numbers in excel to see the effect of 70/30 vs 90/10 on a time frame of 5-7 years so you can see it for yourself.

If you are retiring early, I would just go with the allocation I plan to use on 5-7 years once retired. Why take more risk if you can save enough and don't need to take more risk.

MDM

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Re: How much to invest into stock market for my situation???
« Reply #8 on: April 21, 2019, 10:28:10 PM »
I donít have a 401, but rather Roth IRA
Do you have any traditional (i.e., pre-tax) accounts?  If so, what balance?  How much pension expected?

The lower those numbers, the more a traditional IRA is likely better for you than Roth.

marty998

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Re: How much to invest into stock market for my situation???
« Reply #9 on: April 22, 2019, 05:43:38 PM »
Do you have a spouse? Are they on board with your plans?

What would they think if you just decided to allocate $5k of the monthly household budget without their input?

Happyfatherof2

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Re: How much to invest into stock market for my situation???
« Reply #10 on: April 22, 2019, 09:30:29 PM »
Yes spouse is on board. We will make decision together.
Our Roth does not have much. We only contributed a few years. We really just focused on paying our debts off first.
We will talk to our accountant regarding a tradional Ira vs Roth.

I did read the investment order and I think we are at the last one, which is to invest in a taxable account.
So for taxable account we would like some input.
We still plan on not touching our Roth until 60.
Let us know what your input is please!?!?

wageslave23

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Re: How much to invest into stock market for my situation???
« Reply #11 on: April 23, 2019, 07:36:31 AM »
Ok! Then I plan on using betterment
What do you think is a good allocation.
Iím 40. Want to be FI in 5-7 years.

70/30
80/20
90/10?

5-7 years is a very short time and compounding will not have much of an effect. If you run the numbers, the expected gain with 90/10 vs 70/30 will be very small, so your upside is small, but you still face the bigger downside, so it doesn't make much sense to me to have a higher allocation.

I really do suggest you go and run the numbers in excel to see the effect of 70/30 vs 90/10 on a time frame of 5-7 years so you can see it for yourself.

If you are retiring early, I would just go with the allocation I plan to use on 5-7 years once retired. Why take more risk if you can save enough and don't need to take more risk.

5-7 yrs until he starts withdrawing 4%.  But the money will be invested for 30+ yrs hopefully.  I would do 80/20, that usually works the best and has the lowest failure rate historically.

Andy R

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Re: How much to invest into stock market for my situation???
« Reply #12 on: April 23, 2019, 08:28:02 AM »
5-7 yrs until he starts withdrawing 4%.  But the money will be invested for 30+ yrs hopefully.  I would do 80/20, that usually works the best and has the lowest failure rate historically.

As I said, it won't make much difference between now and when this person retires, and the extra risk has downside with virtually no upside since they are able to save the money to reach their goal and in such a short time compounding can't do much, and as such I would look at what they will be invested in at retirement and just use that. If that is 80/20, then sure.

By the way seeing numbers on a page and choosing 80/20 means nothing when facing your money disintegrate before your eyes over a couple of years not knowing when the bleeding will stop or if it will be take a decade or more to recover, or if it will end up in a Japan-style situation. It's easy enough to recommend someone go with 80/20 on the internet, but it's a whole other thing that this person will have to go through if this is not their own personal risk tolerance in a major downturn.

MDM

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Re: How much to invest into stock market for my situation???
« Reply #13 on: April 23, 2019, 09:14:59 AM »
We will talk to our accountant regarding a tradional Ira vs Roth.
You could read Traditional versus Roth - Bogleheads to help determine if your accountant gives you good advice.

Happyfatherof2

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Re: How much to invest into stock market for my situation???
« Reply #14 on: April 23, 2019, 09:30:56 AM »
80:20 sounds good! I donít really follow the market or finance news. It does not interest me.
I may not even withdraw investments after 5-7 years when I ďretireĒ
I hope to work at a local tennis club and make some part time $$$ when I ďretireĒ
But I just want to make sure I have enough $$$ to let go of my current business if I choose to.
And to make sure my investment strategy will be good.