Author Topic: How should I make my portfolio?  (Read 1430 times)

MoneyMike

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How should I make my portfolio?
« on: August 22, 2015, 10:25:44 PM »
I'm new to MMM, but I'm very glad I found this website and blog. A few quick things about me - 25years old, about 20k in savings, no student loans, no debt, I'm an independent contractor that makes about 65k/year after expenses, single, no kids. (Please let me know if you need any other information)

I want to start investing for FI. My accountant told me to make a SEP IRA and he said don't put more than 10k in it for now. That's the easy part I also wanted to double check and make sure I can open a Roth IRA, the only reason I think a Roth would be best for me is because I plan on buying a large amount of real estate and might need to pull some out for opportunities before I'm 59.5. But as far as the stocks go from what I've read I think I'm just going to put all of my money into the vanguard VTSMX and forget about it.

 I have a uncle that is 77 and manages 20 of his own rental properties in another state, he is getting old and wants to sell them all.The average value is about 20k/property and range from SFH's to duplexes and triplexes. I'm hopping to buy them all from him in about 2 years, or buy about 2-3 properties/year. If things with my contract go bad I will move there and manage them myself otherwise I plan to have a property management company do everything and I will stop by a few times a year to check the properties.

I think I have always been a pretty frugal person I don't really spend a whole lot of money- id say on average about $1,400/month (which is currently going down). I don't have Cable anymore, I'm starting to cook and now I walk to work and only drive once per week. I know I can cut down on food expenses also, but the main thing I want to know is if I'm going about investing right.

1. All VTSMX in a SEP IRA and then maxing a Roth IRA($5,500) because I can't have a traditional IRA along with those right?

2. After I max out the IRA's where should I put the money I plan to use to buy the real estate in the next couple years with? Bettermint, or regular vanguard taxable account?

3. What do you think is my best strategy in buying the rentals from my uncle. Buy one by one cash, or buy 5 at a time with mortgages?( he says I can take over the mortgages and have them transferred into my name if I give him 5k as down payment on a 20k property- there's only about 10k left on the 15year mortgages(with 5years remaining); he's giving me a good deal on the property) these numbers are estimates

Or if buying these properties from him is a bad idea in the first place. I do want to have a large portion of my portfolio In real estate and I think this would be a great start.

I will really appreciate any advice. By the way I made this with my phone and I don't have the best writing skills so please let me know if you need anymore information or need me to be more specific with some of the numbers, Thanks in advance.

forummm

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Re: How should I make my portfolio?
« Reply #1 on: August 23, 2015, 06:45:31 AM »
As an independent contractor you could max a solo 401k plus a Roth or traditional IRA. that's a lot of tax-advantaged savings.

protostache

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Re: How should I make my portfolio?
« Reply #2 on: August 23, 2015, 11:20:42 AM »
As an independent contractor you could max a solo 401k plus a Roth or traditional IRA. that's a lot of tax-advantaged savings.

True, but as an independent contractor there's a fine balance to be had between money in a cash buffer and stashed in a pre-tax retirement fund. I don't know what the accountant's motivation for the $10k was, but it seems like it may be related to keeping a cash buffer.

Rosy

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Re: How should I make my portfolio?
« Reply #3 on: August 23, 2015, 01:20:28 PM »
Welcome to the forum, MoneyMike:)

There is a real estate-landlord section in this forum, so you might want to ask the property questions there. It sounds like a great opportunity, but I don't know anything about real estate.