Author Topic: Where do I start...?  (Read 4682 times)

Mickijune

  • 5 O'Clock Shadow
  • *
  • Posts: 74
  • Location: Washington State
Where do I start...?
« on: January 29, 2013, 03:35:30 PM »
Okay, don't punch me in the face too many times please!!

My husband and I started working towards paying off our debt last August and have made progress, despite my husband's attitude of being not-so-into the Mustachian ways..."You gotta have fun sometimes" and all that jazz. We are still 5 years or so away from paying off our debt (not including the mortgage) but I want to get a head start on learning all about investing for our future.

Anyway, my question is where the heck do I start in terms of investing and handling our retirement accounts?!?  I have $8k in a 408b account with ING (from previous job). I have $700 in my 401k through my employer with ING also, on hold for now until we at least pay off the credit cards (July 2013?).  I have no idea what my husband has...

I would expect to have to learn all the lingo and what means what, then differences in accounts, and...yeah. How can I learn what I need to make sound decisions. Are there any helpful books or websites for newbies? I have read many threads here and it all goes in one ear and out the other...

Any suggestions would be appreciated!

RoseRelish

  • Stubble
  • **
  • Posts: 179
  • Age: 33
  • Location: Chicagoland
    • RoseRelish - Slow down and Enjoy Life
Re: Where do I start...?
« Reply #1 on: January 29, 2013, 04:54:23 PM »
The big investor websites are pretty helpful on the basics, IMO. Vanguard, Schwab, Fidelity all have education sections that I'd say are great places to start.

The three main buckets are:

IRA/401k/403b/etc: Skip taxes today and pay taxes at retirement/withdrawal.
ROTH: Pay taxes today but no taxes at retirement/withdrawal.
Taxable: Pay taxes today and on all future earnings/withdrawals.

Obviously, there is a lot of nuance, tons of options for growing savings, and other issues with fees/age to take withdrawals/etc. Good luck! Learning about this subject will make you a superstar to your friends and family.

icefr

  • Bristles
  • ***
  • Posts: 325
Re: Where do I start...?
« Reply #2 on: January 29, 2013, 09:46:19 PM »
Another good site to check out is the Bogleheads wiki: http://www.bogleheads.org/wiki/Main_Page
A lot of it might be over your head right now, but there's probably somewhere that you can find something that does make sense around there!

I would consider "rolling over" your 403(b) at ING to somewhere like Vanguard since they probably have lower fees. "Rolling over" is basically a transfer without withdrawing the money. Target date retirement funds or lifecycle funds are a good place to stash your money while you figure things out :)

Khan

  • Pencil Stache
  • ****
  • Posts: 616
Re: Where do I start...?
« Reply #3 on: January 30, 2013, 06:15:18 AM »
What you want to do is ask yourself how much risk you're willing to take, and how active a role you want to have with your money. For me, I love managing my money, it's something I actually do enjoy, along with picking individual investments. For others, ETF's serve all the purposes you want, and with ETF's(exchange traded funds, a low management cost mutual fund that acts as an index) you can place money on entire sectors.

Another thing you're going to want to do is diversify your investment approaches eventually, there are many different ways of diversification. There's sector diversification(healthcare, industrial, tech, insurance, financial, etc.), there's country diversification, there's investment vehicle(stock, bond, REIT, actual rental properties), there's prime driver of gains(dividends and reinvestment, capital gains[stock appreciation]).

The last thing you're going to want to think on is your investment timeframe. For a small timeframe, stocks can be incredibly dangerous, any bubble can form or collapse at any time. For a long timeframe(5+ years, especially >10) stocks are a great long term investment. For me, I'm totally willing to see my net worth be cut in half, because most of my investments that are self managed are long term companies that I am DRIP'ing into(dividend reinvestment plan, buying more shares with the dividend I gain for owning the current shares), which means that in the event of a major market collapse, if my dividends don't dissapear, then I get to own more of the stock for cheaper, a win-win if you ask me. Again, self managing is a personal choice, and is incredibly unlikely to outperform the market in the long term for almost all investors. The best long term predictor of good returns is well chosen diversification, such as proven by Harry Markowitz when he earned a Nobel prize for his efforts.

So my advice is to think about yourself, and what your goals are and how you are.


Mickijune

  • 5 O'Clock Shadow
  • *
  • Posts: 74
  • Location: Washington State
Re: Where do I start...?
« Reply #4 on: January 30, 2013, 07:37:08 AM »
Ah! Thank you all so much :) I'll check out the websites asap!

I'll have to sit down with my husband and talk about our future and goals and such. I'll look into Vanguard, been reading a lot about it here on the website. Nobody on my side of the family is anywhere near knowledgable regarding investing, all they know is that they have a retirement account that they put money into. First generation college graduate, might as well be the first generation investor also!


GoStumpy

  • Stubble
  • **
  • Posts: 243
    • YNAB = The ultimate budgeting software
Re: Where do I start...?
« Reply #5 on: January 30, 2013, 08:14:33 AM »
I'm right there with you, confused as to where to start...

I have RSP & TFSA through my online banking, but both funds have higher MER's than I want... yet I can't see an option without opening a TD Waterhouse Brokerage account to trade in the e-series funds?

I suppose that's the next step, to open a TD Waterhouse account if that's the route I want to go?

tooqk4u22

  • Handlebar Stache
  • *****
  • Posts: 2196
Re: Where do I start...?
« Reply #6 on: January 30, 2013, 08:35:52 AM »
I'll have to sit down with my husband and talk about our future and goals and such.

Its great that you are starting to think about investing but you absolutely need to sit down with husband and figure what you have/owe in total and where it all is, then figure out goals and game plan.  If you don't row together, you won't grow together.

No sense in investing if you have a bunch of high interest rate debt and no emergency fund.  If you need more help you may want to create a journal post with all of the particulars.

Mickijune

  • 5 O'Clock Shadow
  • *
  • Posts: 74
  • Location: Washington State
Re: Where do I start...?
« Reply #7 on: January 30, 2013, 11:49:39 AM »

Its great that you are starting to think about investing but you absolutely need to sit down with husband and figure what you have/owe in total and where it all is, then figure out goals and game plan.  If you don't row together, you won't grow together.

No sense in investing if you have a bunch of high interest rate debt and no emergency fund.  If you need more help you may want to create a journal post with all of the particulars.


I have a journal :)
http://www.mrmoneymustache.com/forum/journals/mickijune's-journey-to-fi!!/

And I'm going to make a special wall piece that says "If you don't row together, you won't grow together." Is that okay with you tooqk4u22? I love it!

tooqk4u22

  • Handlebar Stache
  • *****
  • Posts: 2196
Re: Where do I start...?
« Reply #8 on: January 30, 2013, 12:08:08 PM »

Its great that you are starting to think about investing but you absolutely need to sit down with husband and figure what you have/owe in total and where it all is, then figure out goals and game plan.  If you don't row together, you won't grow together.

No sense in investing if you have a bunch of high interest rate debt and no emergency fund.  If you need more help you may want to create a journal post with all of the particulars.


I have a journal :)
http://www.mrmoneymustache.com/forum/journals/mickijune's-journey-to-fi!!/

And I'm going to make a special wall piece that says "If you don't row together, you won't grow together." Is that okay with you tooqk4u22? I love it!

Do as a choose.  Thanks for the link-it looks like you are making great progress.  Many things were touched on but just be sure to pay off the highest rate debt first.   Also be sure to contribute to retirement accounts to get the match - surely the match will be a better return than the debt. 

As for your original questions, any investments that you have are in retirement accounts and for now your best bet is to pick a mix with decent asset allocation.  Vanguard total world with a bond fund (80/20) would be very simple.

the fixer

  • Handlebar Stache
  • *****
  • Posts: 1037
  • Location: Seattle, WA
Re: Where do I start...?
« Reply #9 on: January 30, 2013, 07:39:02 PM »
This covers all the basics in video form. I recommend this to anyone trying to learn about investing. http://financinglife.org/

Mickijune

  • 5 O'Clock Shadow
  • *
  • Posts: 74
  • Location: Washington State
Re: Where do I start...?
« Reply #10 on: January 31, 2013, 08:11:11 AM »
Thank you fixer!

daverobev

  • Magnum Stache
  • ******
  • Posts: 3376
  • Location: France
Re: Where do I start...?
« Reply #11 on: January 31, 2013, 06:53:12 PM »
I'm right there with you, confused as to where to start...

I have RSP & TFSA through my online banking, but both funds have higher MER's than I want... yet I can't see an option without opening a TD Waterhouse Brokerage account to trade in the e-series funds?

I suppose that's the next step, to open a TD Waterhouse account if that's the route I want to go?

Hi,

who are you with/and what funds?

RBC have "ok" Canadian and US index funds at about 0.7% MER. There is no reason NOT to open the eSeries account with TD, but in case you already have the RBC account they aren't too bad.

One option is to have a brokerage account too - it depends if you are looking at regular investing ("dollar cost averaging") or just occasional, large purchases. If the latter, the $5 fee at a brokerage is not bad (eg Questrade).

What you can do with the higher MER funds, assuming you are investing in "the right ones" (ie, passively managed index trackers rather than actively managed - usually if they have the word "index" you're ok; as I said, RBC charges 0.7%, eSeries is 0.35%, CIBC charge 1% I believe), you can move a chunk over from the bank to a broker every so often - then you have the best of both worlds, ultra-low cost of purchase, and low MER as MOST of your money is costing you nothing to "run".

Anyway, check out Canadian Couch Potato - loads of good info there!