I found out about FI about a year ago and have been cutting down my expenses since then, and just recently realized how easy it is as an American to start investing. I have decided to bite the bullet and do it! Here are the details:
I am 37 years old, American living overseas, no debt but no IRA/401ks/SS either, due to not working for a US company. I have 30k saved now, and can save about 30k more per year. The career's fine, and I will probably see a gradual increase in the amount I can save per year. But I'd rather spend my time doing fun stuff than working!
My goal is to be retired within 13 years, hopefully sooner. Despite having no fixed income/SS, I feel willing to take risk, because I have some family backup, if it came to that. Going with more bonds & having a high probability of being able to retire in 20 years is worse for me than a somewhat lower chance to retire in 13 years.
My plan is use a Schwab brokerage account & run a lazy portfolio, just checking in every time I deposit more money, and rebalancing.
Here's my planned asset allocation:
FNDE 10% http://www.etf.com/FNDE
FNDF 15% http://www.etf.com/FNDF
IAU 10% http://www.etf.com/IAU
SCHB 45% http://www.etf.com/SCHB
SCHZ 20% http://www.etf.com/SCHZ
All trading free in Schwab except IAU which is 9$/trade. I'm still flexible on the percentages. I put in the gold due to reading about the permanent portfolio. I'm not committed to the fundamental indexes; they have higher expense ratios, which I don't like, but also promise more returns.
My investment procedure:1. Start with the 30k USD
2. Transfer new money into the account every time I accumulate 3-4k.
3. Buy shares up to the allowance while maintaining balance.
4. When paying fees only buy IAU in chunks of 900 usd or more
5. Put new money into whatever needs it to maintain asset balances. Any left over money should be spent rather than kept as cash in the account, though.
6. If a particular asset class percentage is off by more than 5%, and regular additions of money aren't enough to fix it over a couple of months, investigate the tax effects of selling to rebalance. At that point, make a decision on what to do. Otherwise don't sell.
7. Re-invest all dividends
Goal:Follow the plan, without adding or removing new entries or changing the target percentages, for 3 years or until 100k. Don't fiddle with or spend much time on it.
What do you think of my plan, asset allocation, and procedure?