Author Topic: Starting Late  (Read 4877 times)

dalekeener

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Starting Late
« on: January 09, 2015, 12:36:48 PM »
53 years old / almost 54...lots of mistakes along the way and will not bore you with the gruesome details...anyway...with just my house as debt 3.75% mortgage, 98k or so left.  Have no 401k at work but am now for the last year maxing IRA.  How should my IRA be invested knowing that I will be working until at least 67 more than likely. Make over 60k per year. I also have started putting a small amount of money into an account outside my IRA and will need to have some idea on how that should be invested.  Was thinking about given the market volatility investing my IRA between Utility ETF and Short and Long term treasuries. Just looking for a little direction. Any advice would be helpful...

WYOGO

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Re: Starting Late
« Reply #1 on: January 09, 2015, 12:42:10 PM »
I would invest aggressively with a S&P 500 Index fund or Total US Market VTSAX. These offer above average returns with average risk. Time is of the essence...go big. The key is to ensure you can handle the swings. Focus on saving as much as you can, reduce expenses and simply take the returns of the market. This method has a fairly proven track record.

dalekeener

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Re: Starting Late
« Reply #2 on: January 09, 2015, 12:52:51 PM »
I would invest aggressively with a S&P 500 Index fund or Total US Market VTSAX. These offer above average returns with average risk. Time is of the essence...go big. The key is to ensure you can handle the swings. Focus on saving as much as you can, reduce expenses and simply take the returns of the market. This method has a fairly proven track record.

Should I use an ETF or Mutual fund...My account is at Schwab so either is an option....

Le Barbu

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Re: Starting Late
« Reply #3 on: January 09, 2015, 12:58:02 PM »
No need to be conservative with investing if amounts are low. I would go 100% VTI with the first 50k$ saving and then get some diversification 70%/30% between VTI and VXUS. Low cost and good returns on the long run.

Utility and treasuries are sensible to interest rate rise and that could happen anytime sooner or later.

For me I'm close to 43, mortage is 93k$ (repaid in 4 years) and 100% investing is in stock market

Le Barbu

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Re: Starting Late
« Reply #4 on: January 09, 2015, 01:02:33 PM »
I would invest aggressively with a S&P 500 Index fund or Total US Market VTSAX. These offer above average returns with average risk. Time is of the essence...go big. The key is to ensure you can handle the swings. Focus on saving as much as you can, reduce expenses and simply take the returns of the market. This method has a fairly proven track record.

Should I use an ETF or Mutual fund...My account is at Schwab so either is an option....

If you trade for free, ETF is the best. If not, then compare the mutual fund fee and buy ETF later. I do monthly contribution in mutual funds with no trading fees (MER are 0.7%) then when I hit 10k$ in mutual fund, I buy ETF for 9.95$. My ETF MER are 0.05% (VTI) to 0.15% (VXUS). Usualy it is the good time for rebalancing, once or twice a year.

GGNoob

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Re: Starting Late
« Reply #5 on: January 09, 2015, 01:07:23 PM »
Schwab ETFs have free commission and the lowest expense ratios in the industry. I'd go with them.

http://www.schwab.com/public/schwab/investing/accounts_products/investment/etfs/schwab_etfs/market_cap_index_etfs

You could create a simple 100% stock portfolio out of something like this:

60% SCHB (Total US Stock Market)
10% SCHH (US Real Estate)
20% SCHF (International Developed / Large-Cap)
10% SCHE (Emerging Markets)

dalekeener

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Re: Starting Late
« Reply #6 on: January 09, 2015, 01:07:48 PM »
I can trade ETF's for free

dalekeener

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Re: Starting Late
« Reply #7 on: January 09, 2015, 01:47:20 PM »
Thanks everyone....I am transitioning into as suggested.  Right now have the SCHB and the SCHH bought....

SparkyPeanut

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Re: Starting Late
« Reply #8 on: January 09, 2015, 05:11:04 PM »
You are dollar-cost averaging in (i.e. you will purchase every month), is that correct? 
So if the market goes down this year you will be purchasing shares at cheaper prices with a view to the long run.

dalekeener

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Re: Starting Late
« Reply #9 on: January 10, 2015, 09:41:18 AM »
for dollar cost averaging is etf's or mutual funds better....will be using schwab account

matchewed

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Re: Starting Late
« Reply #10 on: January 10, 2015, 09:52:54 AM »
for dollar cost averaging is etf's or mutual funds better....will be using schwab account

Equal. There will be no real advantage with going with either direction.

DrF

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Re: Starting Late
« Reply #11 on: January 10, 2015, 12:26:53 PM »
Where to start....

1) Why are you targeting retirement in 13 years? With the advice of MMM and the Mad Fientist you should go from 0 to hero in ~8-10 years. Create a realistic budget and savings plan so you can reach that goal.

2) You can begin extra contributions to your retirement accounts at 55, please do so!

3) Since you are so close to social security, I would calculate that into your retirement. Most on the forums don't because they plan to be retired for many years before they are eligible for SS benefits.

4) DO NOT make extra payments to your mortgage (if you are currently doing so please stop!). Multiple threads on the forum prove paying down a mortgage before FI can be detrimental. Your mortgage rate is so low, it is nearly free money.

5) Is 60k your household income, or just yours (or is it one and the same)?

RapmasterD

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Re: Starting Late
« Reply #12 on: January 13, 2015, 08:58:45 PM »
#4 from Dr. Funk is wisdom. Underscore it. Don't be in any rush to pay off that 3.75% debt.

Does 'starting late' mean you currently have no savings? Just asking.

Agree on the 100% equity call. You can change the allocation a bit once you've built up a pot and as you get closer to retirement age.