Author Topic: Investing Advice Needed  (Read 3181 times)

jggonz

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Investing Advice Needed
« on: July 14, 2015, 08:48:39 PM »
I am in need for advise in how I am currently investing my $.

My age is 34 and currently I have the following:

Traditional IRA $16,000 in Vanguard 2045 Target Retirement

High Yield Savings Amex .90% year APY $30,000

I believe that I can invest the $30,000 better but need recommendations. My main goal is to earn a higher returns but take out money as needed from time to time.

Any tips are greatly appreciated. Thank you! JR



« Last Edit: July 14, 2015, 09:36:06 PM by jggonz »

TomTX

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Re: Investing Advice Needed
« Reply #1 on: July 14, 2015, 09:13:04 PM »
Put it in Target Retirement if you're comfortable with that level of volatility.

It's not "Interest" - you are looking for gains.

Interest is a return with (notionally) complete safety of your investment.

mrpercentage

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Re: Investing Advice Needed
« Reply #2 on: July 15, 2015, 05:52:31 AM »
Put the $30,000 in stock symbol O (Reality Income)
That should give you $130+ every month in dividends alone. Forget what the stock price does. Divert the dividends into treasury bonds and see what kind of insanity that produces or shoot them over to a cd-- or god forbid have the nerve to reinvest and get an extra $0.60 every month payed to you (compounding mind you)

forummm

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Re: Investing Advice Needed
« Reply #3 on: July 15, 2015, 06:03:16 AM »
The ideal is that you are actively saving money each month. So if you needed to spend something you'd be spending it from your income (whether that's 1 paycheck or 2 or 3, etc). The ideal is to keep your savings untouched for retirement.

How often are you going to be touching this money?

Put the $30,000 in stock symbol O (Reality Income)
That should give you $130+ every month in dividends alone. Forget what the stock price does. Divert the dividends into treasury bonds and see what kind of insanity that produces or shoot them over to a cd-- or god forbid have the nerve to reinvest and get an extra $0.60 every month payed to you (compounding mind you)

Most people here (including me) will argue that new investors should not invest in individual stocks because they don't know what they are doing and are more likely to harm their portfolio than improve it. A good rule is to not invest in something you don't understand. I have quite a bit of money and I've never heard of O.

mrpercentage

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Re: Investing Advice Needed
« Reply #4 on: July 15, 2015, 06:08:29 AM »
a Reality Trust that pays monthly dividends and has been for over 20 years.. take a look at Burger King-- they are probably parked on O's land

you like etfs okay-- look at OUSA.. a quality low volatility high yield dividend ETF opening today I think at $25 a share

jggonz

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Re: Investing Advice Needed
« Reply #5 on: July 15, 2015, 09:21:21 AM »
The ideal is that you are actively saving money each month. So if you needed to spend something you'd be spending it from your income (whether that's 1 paycheck or 2 or 3, etc). The ideal is to keep your savings untouched for retirement.

How often are you going to be touching this money?

Put the $30,000 in stock symbol O (Reality Income)
That should give you $130+ every month in dividends alone. Forget what the stock price does. Divert the dividends into treasury bonds and see what kind of insanity that produces or shoot them over to a cd-- or god forbid have the nerve to reinvest and get an extra $0.60 every month payed to you (compounding mind you)

Most people here (including me) will argue that new investors should not invest in individual stocks because they don't know what they are doing and are more likely to harm their portfolio than improve it. A good rule is to not invest in something you don't understand. I have quite a bit of money and I've never heard of O.

I plan to touch the money as needed when unexpected expenses come up. I would say 2 to 3 times per year.

For retirement I started late in the game, but have been maxing out my IRA yearly contributions.

But for this saving / emergency money I think I can do better than just have it sitting in a high yield savings account.
« Last Edit: July 15, 2015, 09:36:19 AM by jggonz »

BarkyardBQ

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Re: Investing Advice Needed
« Reply #6 on: July 15, 2015, 09:50:14 AM »
The ideal is that you are actively saving money each month. So if you needed to spend something you'd be spending it from your income (whether that's 1 paycheck or 2 or 3, etc). The ideal is to keep your savings untouched for retirement.

How often are you going to be touching this money?

Put the $30,000 in stock symbol O (Reality Income)
That should give you $130+ every month in dividends alone. Forget what the stock price does. Divert the dividends into treasury bonds and see what kind of insanity that produces or shoot them over to a cd-- or god forbid have the nerve to reinvest and get an extra $0.60 every month payed to you (compounding mind you)

Most people here (including me) will argue that new investors should not invest in individual stocks because they don't know what they are doing and are more likely to harm their portfolio than improve it. A good rule is to not invest in something you don't understand. I have quite a bit of money and I've never heard of O.

I plan to touch the money as needed when unexpected expenses come up. I would say 2 to 3 times per year.

For retirement I started late in the game, but have been maxing out my IRA yearly contributions.

But for this saving / emergency money I think I can do better than just have it sitting in a high yield savings account.

mrpercentage's 'my size fits all' approach would be dangerous here. The last thing you want to do is invest $30k into a single stock, the day you need the money it could be worth very little. You shouldn't invest short term cash into any stock. You need to ask yourself what kind of unexpected expense can arise and why aren't you already budgeting for it. If you can't budget for it you need an emergency fund. How much should that emergency fund be? Safe margin of error is 6-12 months living expenses.

- I would suggest, holding your 6 month emergency fund (which can be use for unexpected expense) in a savings account.
- Hold onto 5500 for your 2016 IRA
- Invest the rest in a Vanguard Taxable account according to your Asset Allocation. See here if you're unsure. http://www.bogleheads.org/wiki/Lazy_portfolios

Down the road if you get comfortable in with your expenses and are sitting on too much emergency fund, invest half of it, knowing you could sell it if you needed to.

Do you have access to a 401k? An IRA won't get you to far in retirement (especially early retirement) unless you have a huge taxable account or other income like rentals or a pension. Or you plan on funding your IRA for a 30+ year working career.

If you have access to a 401k, you should consider maxing it out by the end of the year, and living off your cash. Reducing your taxes by some tax free, tax sheltered investing working for you.

jggonz

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Re: Investing Advice Needed
« Reply #7 on: July 15, 2015, 10:42:28 AM »
The ideal is that you are actively saving money each month. So if you needed to spend something you'd be spending it from your income (whether that's 1 paycheck or 2 or 3, etc). The ideal is to keep your savings untouched for retirement.

How often are you going to be touching this money?

Put the $30,000 in stock symbol O (Reality Income)
That should give you $130+ every month in dividends alone. Forget what the stock price does. Divert the dividends into treasury bonds and see what kind of insanity that produces or shoot them over to a cd-- or god forbid have the nerve to reinvest and get an extra $0.60 every month payed to you (compounding mind you)

Most people here (including me) will argue that new investors should not invest in individual stocks because they don't know what they are doing and are more likely to harm their portfolio than improve it. A good rule is to not invest in something you don't understand. I have quite a bit of money and I've never heard of O.

I plan to touch the money as needed when unexpected expenses come up. I would say 2 to 3 times per year.

For retirement I started late in the game, but have been maxing out my IRA yearly contributions.

But for this saving / emergency money I think I can do better than just have it sitting in a high yield savings account.

mrpercentage's 'my size fits all' approach would be dangerous here. The last thing you want to do is invest $30k into a single stock, the day you need the money it could be worth very little. You shouldn't invest short term cash into any stock. You need to ask yourself what kind of unexpected expense can arise and why aren't you already budgeting for it. If you can't budget for it you need an emergency fund. How much should that emergency fund be? Safe margin of error is 6-12 months living expenses.

- I would suggest, holding your 6 month emergency fund (which can be use for unexpected expense) in a savings account.
- Hold onto 5500 for your 2016 IRA
- Invest the rest in a Vanguard Taxable account according to your Asset Allocation. See here if you're unsure. http://www.bogleheads.org/wiki/Lazy_portfolios

Down the road if you get comfortable in with your expenses and are sitting on too much emergency fund, invest half of it, knowing you could sell it if you needed to.

Do you have access to a 401k? An IRA won't get you to far in retirement (especially early retirement) unless you have a huge taxable account or other income like rentals or a pension. Or you plan on funding your IRA for a 30+ year working career.

If you have access to a 401k, you should consider maxing it out by the end of the year, and living off your cash. Reducing your taxes by some tax free, tax sheltered investing working for you.

Unfortunately, my company does not offer a 401k. Currently, I was thinking of starting a Roth IRA versus continuing the traditional IRA. The reason for this is that in the event I have to tap into it I can in worst case scenario.

I do have a rental property that I am investing in with more than $100k in gains.

My current house has about $130k in gains as well.

At this point I do believe that I will be working for 30 plus years, unless work and income changes in the future.

If I keep 6 month of living expenses as an emergency fund that would leave me with $10k to invest at the moment. Unless it is safe to invest some of the emergency funds. 

BarkyardBQ

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Re: Investing Advice Needed
« Reply #8 on: July 15, 2015, 10:51:33 AM »
If I keep 6 month of living expenses as an emergency fund that would leave me with $10k to invest at the moment. Unless it is safe to invest some of the emergency funds.

Everyone has a different risk tolerance for whether they are willing to invest their ER funds. We plan to invest half of ours soon and keep half in cash. Hopefully that will be a temporary bandaid and we'll eventually invest all of it. You could invest it in tax free muni bonds, but the returns are lower than equities.

I think if I was in your situation, I would keep the 20k EF in a 1% savings account. Invest 10k in VTSAX and set an automatic transfer of the interest from the savings account to invest in VTSAX every month. After maxing out your IRA each year, invest any additional savings you don't need in the EF into your brokerage account.

forummm

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Re: Investing Advice Needed
« Reply #9 on: July 15, 2015, 11:45:46 AM »
Zdrave's advice is good.

I personally have a very high savings rate, 2 very reliable salaries, a bunch of empty credit cards, and a bunch of Vanguard funds I could have in my account in 2 days, so I can fund emergencies out of my paychecks or with those other sources. As a result I only keep a few k in checking. Your situation may be different.

BarkyardBQ

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Re: Investing Advice Needed
« Reply #10 on: July 15, 2015, 12:04:28 PM »
Zdrave's advice is good.

I personally have a very high savings rate, 2 very reliable salaries, a bunch of empty credit cards, and a bunch of Vanguard funds I could have in my account in 2 days, so I can fund emergencies out of my paychecks or with those other sources. As a result I only keep a few k in checking. Your situation may be different.

Very good point. If OP can just fund an emergency out of upcoming expense the EF could be much smaller. We have two 457's and two 403's, and save cash to fund the following years IRAs... this leaves little for 'emergencies' with take home pay. So we have a decent EF, because filing paper work and stopping pretax contributions is a much larger hassle.

jggonz

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Re: Investing Advice Needed
« Reply #11 on: July 15, 2015, 12:08:30 PM »
If I keep 6 month of living expenses as an emergency fund that would leave me with $10k to invest at the moment. Unless it is safe to invest some of the emergency funds.

Everyone has a different risk tolerance for whether they are willing to invest their ER funds. We plan to invest half of ours soon and keep half in cash. Hopefully that will be a temporary bandaid and we'll eventually invest all of it. You could invest it in tax free muni bonds, but the returns are lower than equities.

I think if I was in your situation, I would keep the 20k EF in a 1% savings account. Invest 10k in VTSAX and set an automatic transfer of the interest from the savings account to invest in VTSAX every month. After maxing out your IRA each year, invest any additional savings you don't need in the EF into your brokerage account.

Zdrave, thank you very much for your advise. I was looking into VBIAX which is Vanguard Balanced Index Admiral Fund, but I am sure the return is not as great as the VTSAX.

BarkyardBQ

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Re: Investing Advice Needed
« Reply #12 on: July 15, 2015, 12:15:50 PM »
VBIAX holds 40% bonds. That's recommended allocation for someone who is retired or closer to retirement. You've got a long way to go, I'd stay away from bonds. But that will be a decision you should make for your comfort level. VTSAX can be volatile, going up and down, but up over the long run. If you by VTSAX, you should do so with the intention of keeping it invested and continuing to invest in it until you can retire or use it for some other purchase 10 years out. That should be ok since you have a sufficient emergency fund in cash. My wife and I will eventually put our EF into VTSAX and continue investing, if we ever have a true emergency then we can evaluate what needs to be done. Another aspect I like about investing the EF is that it will change your perspective on what is a true emergency and what can be saved for with upcoming income.

jggonz

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Re: Investing Advice Needed
« Reply #13 on: July 15, 2015, 12:19:00 PM »
Zdrave's advice is good.

I personally have a very high savings rate, 2 very reliable salaries, a bunch of empty credit cards, and a bunch of Vanguard funds I could have in my account in 2 days, so I can fund emergencies out of my paychecks or with those other sources. As a result I only keep a few k in checking. Your situation may be different.

Forummm, is there a very high saving rate account you recommend?

I have a few k in my checking account. So the plan looks like I should keep about 15k between my checking and high savings rate account and the rest in a taxable account. Continue  max out my yearly IRA contributions and continue to save in the taxable account.

BarkyardBQ

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Re: Investing Advice Needed
« Reply #14 on: July 15, 2015, 12:22:42 PM »
There's lot of options for that.

We personally use a Barclays Dream Account (emergency fund at 1.05%+) and Online Savings Account (future IRA contributions at 1%).

Some people like mango, or other fee based high savings rate sites. With that amount of cash you could easily get some account bonus's throughout the year and invest the profit... https://www.google.com/webhp?hl=en#hl=en&q=savings+account+offers
« Last Edit: July 15, 2015, 12:25:20 PM by zdravé »

jggonz

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Re: Investing Advice Needed
« Reply #15 on: July 15, 2015, 12:43:47 PM »
There's lot of options for that.

We personally use a Barclays Dream Account (emergency fund at 1.05%+) and Online Savings Account (future IRA contributions at 1%).

Some people like mango, or other fee based high savings rate sites. With that amount of cash you could easily get some account bonus's throughout the year and invest the profit... https://www.google.com/webhp?hl=en#hl=en&q=savings+account+offers

Cool. Thank you very much!