Search found 78 matches

by xiosen
Fri Mar 22, 2013 4:10 pm
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

OP- What was line 38 on your 1040 last year? Try to make it bigger this year. That's how you get wealthy. It seems to me that most people trying to get ridiculously wealthy have salaries that are considered average at best. And people that are wealthy aren't necessarily trying. They're just doing something they love and trying to provide something for other people. Help yourself by helping others. Why was Steve Jobs rich? Because he made cool stuff to help the rest of us out. Remember that studies show that money doesn't make you happier after about $75K a year. Having made less than that and more than that, I'd have to say that number is about right. The ridiculously wealthy in this conversation came in when I was asked was I talked about...
by xiosen
Fri Mar 22, 2013 1:03 pm
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

Thanks everyone for the amazing replies. This has been a very enlightening conversation. I'm struggling currently because I don't have any specific goals for my next path to wealth, which I always assumed would include starting a business of some kind. Alternately you could create something (music, writings) that would generate royalties, and a website might be a blend of that plus manging a business. But I don't currently have any special skills or inspiration or free time currently to devote to that, so I'm going to focus on maximizing my current 2 buckets and accumulate cash to use for a future business when the mood/timing strikes. Of course in the meantime my career is an important source of fuel for these endeavors, so I should theore...
by xiosen
Thu Mar 21, 2013 4:07 pm
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

Ultimately, this comes down to efficiently using your time and skills. Your time is valuable, and how you choose to spend it is up to you. If you're a web developer and think you can start a successful business, that will probably provide more value to the world and provide you with greater wealth than if you spend that time buying properties and renting them out, since it uses a valuable skill you happen to have. Similarly, if you happen to be incredible at managing properties, maybe you should do the opposite. (And similarly, if you're really sure that you're good at market timing or stock picking, you should do that instead. But we assume that you're not, and that's why the boglehead recommendations make sense.) Most people aren't good ...
by xiosen
Thu Mar 21, 2013 3:12 pm
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

Ultimately, this comes down to efficiently using your time and skills. Your time is valuable, and how you choose to spend it is up to you. If you're a web developer and think you can start a successful business, that will probably provide more value to the world and provide you with greater wealth than if you spend that time buying properties and renting them out, since it uses a valuable skill you happen to have. Similarly, if you happen to be incredible at managing properties, maybe you should do the opposite. (And similarly, if you're really sure that you're good at market timing or stock picking, you should do that instead. But we assume that you're not, and that's why the boglehead recommendations make sense.) Most people aren't good ...
by xiosen
Thu Mar 21, 2013 12:36 pm
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

HardKnocker wrote:To build wealth you need to get some money. How much? The more the better. :moneybag Figure that part out first. This is most important.

Then once you have all that money, invest it wisely so that you don't lose it and it makes a fair return in excess of inflation

Easy.
Im already making some money, its the invest wisely that I am trying to figure out. I currently throw everything extra into my AA but I am wondering whether or not to pursue a mix of index funds, stocks, real estate, etc to create the most wealth since I can afford to have more risk right now.
by xiosen
Thu Mar 21, 2013 12:33 pm
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

I think the most straightforward way to build wealth is to earn a ton of money, either through a high-paying job or starting your own business, and investing most of that income in a moderately-aggressive low-cost portfolio a la Boglehead recommendations. In my mind, owning rental real estate falls into the "owning a business" category. Of course, owning a business or using leverage to buy rental properties entails risk. If you can earn $200k at a regular job and save at least half of it each year, that strikes me as a more efficient path to moderate riches. Of course, if you want to be Zuckerberg rich you've got to start a billion dollar company. No way around that. If you want to be $5-10 million rich, just earning a $200-300k ...
by xiosen
Thu Mar 21, 2013 12:24 pm
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

It seems to me you are asking about multiplying the value of your assets, time, money, creativity, connections, etc. You want to get a high multiplier, which will be required to get to the $50,000,000 range. It seems to me the best way to get that kind of multiplication is to create something that other people want/need. It can be a product(s), an entire business, art, or something else that can either be sold for lots of money (is unique) or can be sold to lots of people. Real Estate falls into this category, since (most) everyone has to live somewhere and there are major barriers to entry (leading to some inefficiencies in pricing?). Starting a business can also be a major multiplier, though, it will have to be a popular business to get ...
by xiosen
Thu Mar 21, 2013 12:01 pm
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

I guess it all depends on what you mean by "real wealth". If you want to end up with $2 million you should do very different things than if you want to end up with $50 million. I suppose in this discussion, real wealth would be the 50 million or highest possible. Assuming that I also contribute money to comfortable retire ($2 million for example), the goal would be to amass as much wealth as possible. Im not really getting into the reasons for amassing wealth or what to do with it, but mainly strategies on how to get there. I realize the $50 million would have to come with a lot of luck (facebook), but mainly looking at strategies on how someone would build wealth that could be as simple as make money and put it into your AA but ...
by xiosen
Thu Mar 21, 2013 11:57 am
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

With the possibility of higher returns comes the greater risk of losing it all. If you're young, you still have time to take on that risk (and hopefully recover from it, should it happen). To build wealth, save as much money as you can (i.e., keep your expenses as low as you can) and take the savings and invest. CDs and MMAs won't do you much for your retirement; I'd suggest an aggressive mix of stocks and bonds. If you're in your 20s, I'd say >= 85% stocks, and <= 15% bonds. Invest via Vanguard. If you don't have much yet, the Vanguard Target Retirement Funds have a minimum starting balance of $1000, so get that together and open an investment account there. I already have the core 4 portfolio with similar asset allocation to what you men...
by xiosen
Thu Mar 21, 2013 11:30 am
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

Re: How do I build wealth?

wesleymouch wrote:The big drains are buying a big house and expensive cars. If you avoid those and live beneath your means you should be fine
Totally get that. Im not worried about being fine and not into excess at all (actually a minimalist), but interested in amassing wealth and some strategies to do just that.
by xiosen
Thu Mar 21, 2013 11:19 am
Forum: Investing - Theory, News & General
Topic: How do I build wealth?
Replies: 87
Views: 12558

How do I build wealth?

Hello Bogleheads, I have been coming here for a few years and I been reading about how some others have been building wealth. I am wondering how their plans mesh with the boglehead world. Basically they suggest doing a mix of the following: Growth Rate - Investment 4% - CDs 8% - Index Funds 15% - Stocks 30% - Real-Estate together with Stocks 45% - Real-Estate together with Stocks and Small Businesses 50+ - Start your own business Note: once you get to the higher growth rates (i.e. stocks, real-estate, and business) in the table above, it is assumed that you will use leverage (i.e. other people's money and time) and actively manage them to increase your returns to the indicative levels. I am basically in the process of doing this and I am wo...
by xiosen
Wed Jan 30, 2013 1:52 pm
Forum: Personal Finance (Not Investing)
Topic: Buying a house as a rental property?
Replies: 3
Views: 764

Re: Buying a house as a rental property?

Is your girlfriend going to be the one the tenant calls if there is a problem, such as repairs, etc.? I would be the landlord since im self employed and could make the time available and possibly look into a management company later on if all the pieces fit. I would simply just rent it out. There is nothing about landlording that is "simply just". Several years ago I moved to another state due to a great career opportunity, thinking that I would "simply just" rent out the house I was moving out of. From the time I put it in service as a rental until I sold it 3.5 years later this past September, I lost $76k. That is net of any tax benefit to depreciation, rental expenses, loss on sale, etc., and doesn't include the valu...
by xiosen
Wed Jan 30, 2013 1:17 pm
Forum: Personal Finance (Not Investing)
Topic: Buying a house as a rental property?
Replies: 3
Views: 764

Buying a house as a rental property?

Hello All, Ive been posting here for the last couple of years and through the help Bogleheads have set up a great investment portfolio started. Im struggling a little bit debating back in forth in my head about purchasing a house to eventually turn into a rental property. Im looking to extend past my network of friends to get some other opinions on the matter. The people I typically turn to for advice are pretty biased in that they are a realtor that wants you to buy, etc. Im at the beginning stages here so just trying to collect some intel. Im in the process of selling my last home in Iowa which is going to close in the next 3 weeks. In the last couple of months ive moved to Arizona and started renting. My mortgage on my last home for $120...
by xiosen
Sat Jan 28, 2012 2:32 am
Forum: Personal Investments
Topic: First portfolio re-balance, how am I doing?
Replies: 15
Views: 1285

Re: First portfolio re-balance, how am I doing?

Rick Ferri coined "core 4" when VGTSX was a "fund of funds" and not eligible for the foreign tax credit (FTC). Here is a subset of discussion from in Rick Ferri's "Core 4" post (started Dec 2007). The FTC change for VGTSX was sometime in 2008. The DDB and Barry Barnitz posts linked below are from Dec 2008. http://www.bogleheads.org/forum/viewtopic.php?p=364046#p364046 I think VGTSX includes more small cap stocks. It certainly has more companies, 2000+ versus 6000+. At this point I think the general consensus prefers VGTSX to VFWIX, all other things equal. Here's another thread discussing the difference between VFWIX and VGTSX. http://www.bogleheads.org/forum/viewtopic.php?t=63402 Ah, this is very helpful, than...
by xiosen
Fri Jan 27, 2012 2:08 pm
Forum: Personal Investments
Topic: First portfolio re-balance, how am I doing?
Replies: 15
Views: 1285

Re: First portfolio re-balance, how am I doing?

First, I want to say nice work. Took me 'til 34 to become a boglehead, and you're doing it at 25. Couple thoughts. 1) if you have some losses in VFWIX and held it 2+ months, now may be a good time to switch to VGTSX. Take the tax loss and get the lower ER. 2) If you want to reduce your reits, open a brokerage in your roth and get VNQ, the etf version of VGSIX which has no minimum holding size. I don't think there are any brokerage fees associated with doing this, but couldn't hurt to ask vanguard. You'll want to convert your VGSIX to VNQ, then sell the extra you don't need. Conversion will avoid the 1% fee if you've held for < 1yr. I have never done this, only read about it here. Confirm with Vanguard (or maybe someone else can chime in) b...
by xiosen
Thu Jan 26, 2012 8:15 pm
Forum: Personal Investments
Topic: First portfolio re-balance, how am I doing?
Replies: 15
Views: 1285

Re: First portfolio re-balance, how am I doing?

To be quite honest at this point I dont really have a level of risk so that is why I bounce between 5% or 20%. I agree that I should set something but I don't really know how to gauge that. I would be comfortable with 5-10% right now but I don't particularly want to sell what I have. I have a steady pace of clients and work with a large enough emergency fund that this investment is out of sight and out of mind. So my thinking was I wouldn't touch bonds for a few years until the percentage gets below 10% and buy more. Ill probably re-evaluate this again at 30 but at this point in my life it is hard to know what to set it at. So based on your suggestion and a goal of 80/20 for now I would contribute: Roth $5k to Total Stock Taxable ~2k to Int...
by xiosen
Thu Jan 26, 2012 7:22 pm
Forum: Personal Investments
Topic: First portfolio re-balance, how am I doing?
Replies: 15
Views: 1285

Re: First portfolio re-balance, how am I doing?

I would like some bonds, I was just thinking 120-age(25). I figured I was young and have more time to recover from a more aggressive strategy. I'm not opposed to keeping it where its at (~20-25%).

So assuming I shoot for 20-25% I am still at least $1k over on bonds. Should I just hang onto this for now or move $1-$2k into something else?

Also what should I purchase from within my IRA to keep it balanced? Should I purchase more Total Stock and International with the $5k IRA? Id like to stick with the Core 4 so do I really have any other option for what to do with the IRA? It may seem like a simple question but I just dont know if purchasing Total Stock or International within an IRA frowned upon?
by xiosen
Thu Jan 26, 2012 7:01 pm
Forum: Personal Investments
Topic: First portfolio re-balance, how am I doing?
Replies: 15
Views: 1285

Re: First portfolio re-balance, how am I doing?

Im self-employed. No plans. Im not really sure what to do from here to try and re-balance things. I have $5k to contribute for 2012 IRA and I plan on contributing more in the taxable portion through the year maybe ~$2k to start. I dont know if in addition to the contributions if I should sell some of the bonds and buy another fund? If so I am not really sure what either. The total stock and total international are tax efficient so should I be buying those in my IRA to balance things?
by xiosen
Thu Jan 26, 2012 6:45 pm
Forum: Personal Investments
Topic: First portfolio re-balance, how am I doing?
Replies: 15
Views: 1285

Re: First portfolio re-balance, how am I doing?

Sorry about that. I was thinking about being more aggressive with less bonds (95/5) or (90/10) so I think my bonds are way off now. Im thinking:

Total Stock Market (VTSAX) - 54%
Total International Stock Market (VFWIX) - 27%
Total Bond Market (VBMFX) - 10%
REIT (VGSIX) - 9%
by xiosen
Thu Jan 26, 2012 5:39 pm
Forum: Personal Investments
Topic: First portfolio re-balance, how am I doing?
Replies: 15
Views: 1285

First portfolio re-balance, how am I doing?

Well I am a couple days away from my first post here last year. Last year was my first jump into investing. I am now looking to re-balance my portfolio and see how I am doing. Emergency Fund: $35,000 Debt: $87,550 Mortgage at 5.25% Tax Filing Status: Single Tax Rate: 25% Age: 25 Current Portfolio: Taxable Accounts $11,117.30 in Total Stock Market (VTSAX) - 42% $4,468.94 in Total International Stock Market (VFWIX) - 17% Roth IRA $7,534.65 in Total Bond Market (VBMFX) - 28.5% $3,255.22 in REIT (VGSIX) - 12.3% Total: $26,376.11 Some of them like REIT are to high but I had to buy in at $3k so I figure I won't touch that until it balances out. Id like to be 95% stocks and 5% bonds for my age. I am following the Core 4 portfolio and I have $5,000...
by xiosen
Tue Jan 18, 2011 9:16 pm
Forum: Personal Investments
Topic: My first investment portfolio - 24 years old
Replies: 5
Views: 1122

@Taylor Larimore, Thank you for explaining why tax-inefficient funds are bad for taxable accounts. I will definitely make sure international stays in taxable. @assurancefp, Thank you! I have not contributed to 2010 Roth yet so that will definitely be the first thing I do. $5,000 in Total Bond Market why I figure out what to do yet for 2011. I have traditional 30 year. Purchase price 113,000. Down payment was 20% so no PMI roughly around 23,000. Right now my emergency fund / savings is at around 50,000 at wells fargo premium something or another. Because I have more than 25k I get a little better interest rate but I still think it is terrible. I would have to check quicken but I think I get around 12-15 interest each month on that balance. O...
by xiosen
Tue Jan 18, 2011 8:20 pm
Forum: Personal Investments
Topic: My first investment portfolio - 24 years old
Replies: 5
Views: 1122

Thanks indexflyfisher, I agree with you on the REIT. To be honest, I wanted to add that due to the diversification and I liked the explanation of it on the Core 4 wiki page. My delima with the total retirement funds is that I cannot control the assets or diversification as much as going through several other funds instead. I am very luck to have discovered index funds and especially bogleheads. I probably only need a $10,000 emergency fund as I am not saving for anything in particular. I was planning on gradually investing the remaining 10 to 15,000 over the next few years as I learn more. I also am fully employeed and plan on investing any extra money or a portion of it monthly. Im in the state of mind now where I am ok with never looking ...
by xiosen
Tue Jan 18, 2011 1:31 pm
Forum: Personal Investments
Topic: My first investment portfolio - 24 years old
Replies: 5
Views: 1122

My first investment portfolio - 24 years old

Hello Everyone, I just posted a thread a couple days ago but I thought I would make a new one as my original question in the thread was about taxable and non-taxable and this one is about AA so bear with me as I repeat some info. Emergency Fund: $25,000 Amount to Account: $25,000 Debt: $89,000 Mortgage at 5.25% I think? Tax Filing Status: Single Tax Rate: 25% Age: 24 Current Portfolio: None Here is what I am thinking based on the responses from the other thread: Investment of $25,000: Taxable Accounts $12,500 (50%) in Total Stock Market (VTSMX) $4,500 (18%) in Total International Stock Market (VFWIX) $3,000 (12%) In REIT (VGSIX) Roth IRA for 2010 $5,000 (20%) Total Bond Market (VBMFX) I was following the Core 4 post in the wiki. I would rat...
by xiosen
Mon Jan 17, 2011 7:32 pm
Forum: Personal Investments
Topic: Young Investor looking for advice
Replies: 12
Views: 1611

Ok, I re-read this forum again more closely once I got home from work. I also purchased and started reading The Bogleheads' Guide to Investing. Here is what I am thinking so far. I have $25,000 in cash that I will wait awhile to invest with as mentioned above. I have $25,000 to invest in retirement. Taxable Accounts $12,500 (50%) in Total Stock Market (VTSMX) $4,500 (18%) in Total International Stock Market (VFWIX) $3,000 (12%) In REIT (VGSIX) Roth IRA for 2010 $5,000 (20%) Total Bond Market (VBMFX) I was following the Core 4 post in the wiki. I would rather have REIT a little lower and more in the total stock market but in order to buy in at the minimum I would invest a little more right now and rebalanced it in a year so it would look mor...
by xiosen
Mon Jan 17, 2011 4:26 pm
Forum: Personal Investments
Topic: Young Investor looking for advice
Replies: 12
Views: 1611

Maybe I am over-typing.

@maxinout, @bodan - I like your strategies. The total Stock Market covers most of what I am looking for and then adding a little International or whatever else as a smaller portion.

So you are suggesting both of those in taxable accounts, and set the IRA up as a Total Bond Market? So every year I would contribute $5,000 into the Total Bond Market? After 5 years would I rebalance this as this would be $25,000 which could potentially make up 50% of my portfolio?
by xiosen
Mon Jan 17, 2011 3:58 pm
Forum: Personal Investments
Topic: Young Investor looking for advice
Replies: 12
Views: 1611

Sorry for the confusion everyone. The main question of my post is to try and figure out what to put in a Roth IRA and what to invest outside the Roth IRA. I do not understand what to put where. My plan is to put $5,000 immediately into a Roth IRA for 2010. The problem is I do not know how to setup the IRA, what type of account at vanguard should it be? The money in the CDs or basically all of the cash $25,000 was because I am not ready to fully throw all of my savings into the market yet. Ditch the CD, and just plan for all of that to be in high interest savings. I wanted to take it slow by investing $5,000 into Roth for 2010, $20,000 in index funds. Over the coarse of the next year I will be adding another $5,000 to my Roth (not included i...
by xiosen
Mon Jan 17, 2011 2:16 pm
Forum: Personal Investments
Topic: Young Investor looking for advice
Replies: 12
Views: 1611

I recommend you use a Target Retirement fund - great diversification at low cost with automatic rebalancing. Just select the one that has your desired asset allocation. I dont know if the target retirement fund is completely what I am looking for. According to the wikie page 'Vanguard_Target_Retirement_Funds' it talks about the tax inefficiency and especially the asset allocation. I am looking more into foreign small cap and REITS as part of my diversification. I also dont know how one fund will work if I want an IRA and other investments. I could not put more than $5k in if it was an IRA? For the taxable account what is your timeline for it? What do you plan on using it on? Car in the future? I have no plans for any purchases. I just purc...
by xiosen
Mon Jan 17, 2011 12:42 pm
Forum: Personal Investments
Topic: Young Investor looking for advice
Replies: 12
Views: 1611

Young Investor looking for advice

Hello Everyone, I just found this site after googling relentlessly looking for some guidance. I believe I know how I want to invest, but I am struggling with the means of how to setup the accounts. I am going to answer all of the questions found in the 'Asking Portfolio Questions' thread before I try to explain my problems with understanding. Emergency Fund: $0 Savings Account: ~$50,000 Debt: $89,000 Mortgage at 5.25% I think? Tax Filing Status: Single Tax Rate: 25% Age: 24 Current Portfolio: None My Plan: My plan for 2010-2011 is to setup and max out a Roth IRA. My employer does not offer any investment opportunities. So the rest of my investments will be setup in taxable accounts. I want to disburse my money to start as: Emergency Fund / ...