Low Income 29yr old

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chevchase
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Low Income 29yr old

Post by chevchase » Sat Dec 14, 2013 2:56 pm

Hi All,

First post on this board, just wanted some thoughts/insight into my terrible financial situation. 29 years old, make very little money but want to be investing smartly even if the amount is very small. I have a small account that I use for probably the opposite of the Bogle philosophy, more just fun/play money. I'm curious people's thoughts of my 403b allocation as well as where to invest money beyond my 403b going forward, while I enjoy investing in individual stocks, my thought was to every week take 50 dollars out of paycheck and put it all into VTI going forward. Another option I was entertaining was using motifinvesting.com and using this motif: https://www.motifinvesting.com/motifs/v ... #/overview. Any thoughts would be greatly appreciated.

Income:32,000
Investments: 2,600
403(b): 5,500(started just last year)
Cash: 1,400
Debt: 500(will be paid off with by end of year)
Emergency Fund: I have 3 months
Tax Filing Status: Single
Tax Rate: unsure(sorry!)
State of Residence: NJ
State of Employment: NY
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: xx% of stocks, I don't know I'd love to hear thoughts on this.

Play money:

Code: Select all

Symbol	Shares	Cost	  Value	 Gain     Gain %	
 
GOOG     1.3417	1,000.01 1,423.26 +423.25  +42.32%
IBM      1.2524	254.69	216.41	-38.28	-15.03%	
TMUS     11.8717  325.00	328.13	+3.13	 +0.96%	
VBR      4.00     316.00	379.36	+63.36	+20.05%	
VDC      2.2711	205.72	249.09	+43.37	+21.08%	 
		            2,101.42 2,606.66 +$494.84 +23.55%	

403(b) Current allocation in bold


Short Bonds/Stable/MMkt
TAP Mny Mkt 0.88(E/R gross%) 0.80(E/R net%)

Interm./Long-Term Bonds
TAP Core 0.99 0.99
BlackRck Infl Bond 0.96 0.86

Large-Cap Stocks
Black Rck Eqty Div 0.99 0.99
Amer Fds Fdmntl 0.96 0.96
TAP Stk Indx 0.72 0.65
Franklin Growth 0.96 0.95

Small/Mid-Cap Stocks
TAP Mid Value 1.32 1.25
Columbia Acorn 1.10 1.10
Columbia SmCapIndx 0.48 0.48

International Stocks
Amer Fds Europac 1.14 1.14

Multi-Asset/Other
PAX Wrld Bal 0.94 0.94
T.Rowe Cap Apprc 0.73 0.72
Black Rck LP 2020 1.39 1.10
Black Rck LP 2025 1.65 1.10
Black Rck LP 2030 1.41 1.10
Black Rck LP 2035 1.76 1.10
Black Rck LP 2040 1.43 1.10
Black Rck LP 2045 2.19 1.10
Black Rck LP 2050 1.45 1.10
Black Rck LP 2055 4.52 1.00
Black Rck LP Retire 1.38 1.10
Last edited by chevchase on Sat Dec 14, 2013 5:58 pm, edited 2 times in total.

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BL
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Re: Low Income 29yr old

Post by BL » Sat Dec 14, 2013 3:22 pm

You need to follow format in Asking Questions http://www.bogleheads.org/forum/viewtop ... f=1&t=6212
so we have all the information, including ERs of available funds.

Not sure you can afford play money unless you live totally frugally in every other way (cars,housing, credit cards, electronic or other toys, food, exercise, etc.). That money invested in a Roth IRA Target Retirement fund at Vanguard would be worth some money after compounding for 30 years.

chevchase
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Re: Low Income 29yr old

Post by chevchase » Sat Dec 14, 2013 3:31 pm

I've edited the original post. I don't believe I can even have a Vanguard account with less than 5,000 dollars.

HurdyGurdy
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Re: Low Income 29yr old

Post by HurdyGurdy » Sat Dec 14, 2013 3:39 pm

Hi Chevchase, can you add the Expense Rates for each available fund? (ER)

ieee488
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Re: Low Income 29yr old

Post by ieee488 » Sat Dec 14, 2013 3:57 pm

Keep it simple in your 403b; you have way too many funds.
Take a look at the 3-fund portfolio; many of us have one.
At the time I am reading your post, it still has not been edited with expense ratios, but based on the names alone, I would say TAP Stock Index would be the one I would choose for stocks and Blackrock Infl Bond for bonds.

Most Bogleheads do not hold individual stocks, and you don't have enough of a portfolio to even have a "fun money" stocks.
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BL
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Re: Low Income 29yr old

Post by BL » Sat Dec 14, 2013 4:53 pm

chevchase wrote:I've edited the original post. I don't believe I can even have a Vanguard account with less than 5,000 dollars.
I still don't see Expense Ratios on any of the funds.
TR funds and Star all have $1000 minimums, most others are $3000.

tibbitts
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Re: Low Income 29yr old

Post by tibbitts » Sat Dec 14, 2013 5:28 pm

If you want to have a "fun" account that's ok for a hobby, but you have to understand that at the amounts you're talking about, relative performance just won't matter. I have a few accounts with $300 in them and that's just silly, but I do anyway.

$32k is only a low income around here, not generally. Do you have a pension in addition to the 403b?

chevchase
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Re: Low Income 29yr old

Post by chevchase » Sat Dec 14, 2013 5:59 pm

Sorry I have added the E/R information provided on the site. I do not have a pension.

ieee488
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Re: Low Income 29yr old

Post by ieee488 » Sat Dec 14, 2013 6:07 pm

tibbitts wrote:If you want to have a "fun" account that's ok for a hobby, but you have to understand that at the amounts you're talking about, relative performance just won't matter.
His "fun" account is currently 1/3 of his entire portfolio. It is not insignificant.
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Louis Winthorpe III
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Re: Low Income 29yr old

Post by Louis Winthorpe III » Sat Dec 14, 2013 6:13 pm

chevchase wrote:Hi All,

First post on this board, just wanted some thoughts/insight into my terrible financial situation. 29 years old, make very little money but want to be investing smartly even if the amount is very small. I have a small account that I use for probably the opposite of the Bogle philosophy, more just fun/play money. I'm curious people's thoughts of my 403b allocation as well as where to invest money beyond my 403b going forward, while I enjoy investing in individual stocks, my thought was to every week take 50 dollars out of paycheck and put it all into VTI going forward. Another option I was entertaining was using motifinvesting.com and using this motif: https://www.motifinvesting.com/motifs/v ... #/overview. Any thoughts would be greatly appreciated.

Income:32,000
Investments: 2,600
403(b): 5,500(started just last year)
Cash: 1,400
Debt: 500(will be paid off with by end of year)
Emergency Fund: I have 3 months
Tax Filing Status: Single
Tax Rate: unsure(sorry!)
State of Residence: NJ
State of Employment: NY
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: xx% of stocks, I don't know I'd love to hear thoughts on this.

Play money:

Code: Select all

Symbol	Shares	Cost	  Value	 Gain     Gain %	
 
GOOG     1.3417	1,000.01 1,423.26 +423.25  +42.32%
IBM      1.2524	254.69	216.41	-38.28	-15.03%	
TMUS     11.8717  325.00	328.13	+3.13	 +0.96%	
VBR      4.00     316.00	379.36	+63.36	+20.05%	
VDC      2.2711	205.72	249.09	+43.37	+21.08%	 
		            2,101.42 2,606.66 +$494.84 +23.55%	

403(b) Current allocation in bold


Short Bonds/Stable/MMkt
TAP Mny Mkt 0.88(E/R gross%) 0.80(E/R net%)

Interm./Long-Term Bonds
TAP Core 0.99 0.99
BlackRck Infl Bond 0.96 0.86

Large-Cap Stocks
Black Rck Eqty Div 0.99 0.99
Amer Fds Fdmntl 0.96 0.96
TAP Stk Indx 0.72 0.65
Franklin Growth 0.96 0.95

Small/Mid-Cap Stocks
TAP Mid Value 1.32 1.25
Columbia Acorn 1.10 1.10
Columbia SmCapIndx 0.48 0.48

International Stocks
Amer Fds Europac 1.14 1.14

Multi-Asset/Other
PAX Wrld Bal 0.94 0.94
T.Rowe Cap Apprc 0.73 0.72
Black Rck LP 2020 1.39 1.10
Black Rck LP 2025 1.65 1.10
Black Rck LP 2030 1.41 1.10
Black Rck LP 2035 1.76 1.10
Black Rck LP 2040 1.43 1.10
Black Rck LP 2045 2.19 1.10
Black Rck LP 2050 1.45 1.10
Black Rck LP 2055 4.52 1.00
Black Rck LP Retire 1.38 1.10
You'll be debt-free in a couple of weeks, you've got a good start on an emergency fund, and you are making saving and investing a priority while you're still in your 20s. That puts you well ahead of an awful lot of people, so I think you're being too hard on yourself when you say your financial situation is terrible. Just be smart with your money when you invest, and you'll be fine.

I would put your 403b into the BlackRock 2055 fund and be done with it. I've got my 401(k) in their 2035 fund, and I like the simplicity of target date funds in general. The less temptation you have to tinker with an allocation among multiple funds, the better, IMO.

Calm Man
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Re: Low Income 29yr old

Post by Calm Man » Sat Dec 14, 2013 6:15 pm

OP, the amounts are too small now to be fancy with. I like your idea of using VTI (period !) for stocks and I would use total bond market for bonds (period !). I suggest losing the idea of having investment money as play money. People here with hundreds and thousands times what you have would never consider using investment funds as play money. Investing isn't playing. And I am worried about your costs. If you work in NY and live in NJ, your commuting costs are eating you alive. I know only because I went from NJ to NY many times in the last few weeks and none of the options are cheap aside from stowing away on a ferry.

HurdyGurdy
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Re: Low Income 29yr old

Post by HurdyGurdy » Sat Dec 14, 2013 6:18 pm

chevchase, does your employer give you a match in the 403 plan?

You must be in the 15% tax bracket, right? please confirm.

Do you have a Roth IRA?

chevchase
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Re: Low Income 29yr old

Post by chevchase » Sat Dec 14, 2013 8:10 pm

Yes, they match up to 5%. I do not have a roth IRA.

P.s. my commuting costs are cheaper than New Yorkers, I pay a total of $80/month(pre tax).

Calm Man
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Re: Low Income 29yr old

Post by Calm Man » Sat Dec 14, 2013 8:20 pm

chevchase wrote:Yes, they match up to 5%. I do not have a roth IRA.

P.s. my commuting costs are cheaper than New Yorkers, I pay a total of $80/month(pre tax).
Path?

HurdyGurdy
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Re: Low Income 29yr old

Post by HurdyGurdy » Sat Dec 14, 2013 8:22 pm

chevchase, I'd just put enough to get the match in the 403, in that TAP Stk Indx. Then I'd open a Roth IRA, perhaps with Vanguard in a Target Retirement fund -- inside, it will have something very close to that Motif profile that you mentioned.

Due to the low income you may qualify for some saver tax break.

tibbitts
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Re: Low Income 29yr old

Post by tibbitts » Sat Dec 14, 2013 8:54 pm

ieee488 wrote:
tibbitts wrote:If you want to have a "fun" account that's ok for a hobby, but you have to understand that at the amounts you're talking about, relative performance just won't matter.
His "fun" account is currently 1/3 of his entire portfolio. It is not insignificant.
Maybe I missed something but it looked to me like it was a couple of thousand dollars, and it's invested in at least a somewhat diversified group of stocks. It sounds to me like it's a hobby, and there's nothing wrong with risking a little money on that. Most of us are guaranteed to lose on our hobbies, not just at risk of losing money, so the OP is ahead of most of us in that respect.

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Watty
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Re: Low Income 29yr old

Post by Watty » Sat Dec 14, 2013 11:36 pm

First post on this board, just wanted some thoughts/insight into my terrible financial situation. 29 years old, make very little money but....
Don't get down on yourself, it might not match your typical poster here but the average household income in the US is only about $55,000 so your income is doing OK for your age especially since it looks like you don't have any debt.

http://en.wikipedia.org/wiki/Household_ ... ted_States

Be sure to check to see if you qualify for the Retirement Savings Contributions Credit when you do your taxes. I suspect that there is a good chance that you will qualify for a 10% credit of the first $2,000 since the income numbers are after pre-tax payroll deductions like your 403b and healthcare deductions.

http://www.irs.gov/uac/Get-Credit-for-Y ... tributions

http://www.irs.gov/pub/irs-pdf/f8880.pdf

chevchase
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Re: Low Income 29yr old

Post by chevchase » Sun Dec 15, 2013 9:46 am

I think its a healthy debate/question whether it makes sense for me to have this play money/investment. I view it as a hobby with the potential to lose some money(hopefully not all of it). But in terms of a hobby, its something that I check on every day and spend a lot of time thinking about, I find considering different ETFs and stocks to be quite enjoyable and time consuming. It also fortunately, so far, has been a theoretical income generator, obviously that could change at any moment.

With regards to opening a Roth IRA, I've thought about it and strongly am considering it but I am somewhat hesitant to put my money into something I really can't touch. I have been blessed with good health but I find myself really concerned about large medical bills, mainly dental, and having access to that money, only if i REALLY need it. I'm not saying Roth is out of the question but could it make more sense for someone like me to keep this money out of an IRA for the moment until I am earning more income and once I feel I'm in a place where I'm less concerned about a large unexpected cost I can move the money into an IRA?

chevchase
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Re: Low Income 29yr old

Post by chevchase » Sun Dec 15, 2013 9:47 am

Calm Man wrote:
chevchase wrote:Yes, they match up to 5%. I do not have a roth IRA.

P.s. my commuting costs are cheaper than New Yorkers, I pay a total of $80/month(pre tax).
Path?
Yes

Histotech
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Re: Low Income 29yr old

Post by Histotech » Sun Dec 15, 2013 9:58 am

chevchase wrote: With regards to opening a Roth IRA, I've thought about it and strongly am considering it but I am somewhat hesitant to put my money into something I really can't touch. I have been blessed with good health but I find myself really concerned about large medical bills, mainly dental, and having access to that money, only if i REALLY need it. I'm not saying Roth is out of the question but could it make more sense for someone like me to keep this money out of an IRA for the moment until I am earning more income and once I feel I'm in a place where I'm less concerned about a large unexpected cost I can move the money into an IRA?
To the best of my understanding you can remove contributions from a Roth at any time, just not any interest. So really, no reason to not open one now. Also, if you wait until you are earning "more income", you potentially sacrifice years of interest compounding. Even a small start is better than no start.
Last edited by Histotech on Sat Jul 04, 2015 9:59 am, edited 1 time in total.

tibbitts
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Re: Low Income 29yr old

Post by tibbitts » Sun Dec 15, 2013 10:24 am

chevchase wrote:I think its a healthy debate/question whether it makes sense for me to have this play money/investment. I view it as a hobby with the potential to lose some money(hopefully not all of it). But in terms of a hobby, its something that I check on every day and spend a lot of time thinking about, I find considering different ETFs and stocks to be quite enjoyable and time consuming. It also fortunately, so far, has been a theoretical income generator, obviously that could change at any moment.

With regards to opening a Roth IRA, I've thought about it and strongly am considering it but I am somewhat hesitant to put my money into something I really can't touch. I have been blessed with good health but I find myself really concerned about large medical bills, mainly dental, and having access to that money, only if i REALLY need it. I'm not saying Roth is out of the question but could it make more sense for someone like me to keep this money out of an IRA for the moment until I am earning more income and once I feel I'm in a place where I'm less concerned about a large unexpected cost I can move the money into an IRA?
Given the unrestricted principal withdrawal provisions, you could treat a roth as kind of a secondary emergency fund, and combine it with your stock-picking hobby. Lots of people with less income than you have, and more debt, have hobbies that are guaranteed to lose closer to 100%.

You can probably find some dental plans that aren't too costly, incidentally, separate from health insurance, although I'm not familiar with what's available in your state. Usually there's a per-year limit in the $2k range, but you usually get negotiated prices and sometimes get free preventive care that makes up for some of the premium. Are you saying you don't have medical insurance from your job? That's a bigger concern, and much bigger expense, than anything you've mentioned so far.

chevchase
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Re: Low Income 29yr old

Post by chevchase » Sun Dec 15, 2013 10:31 am

tibbitts wrote:
chevchase wrote:I think its a healthy debate/question whether it makes sense for me to have this play money/investment. I view it as a hobby with the potential to lose some money(hopefully not all of it). But in terms of a hobby, its something that I check on every day and spend a lot of time thinking about, I find considering different ETFs and stocks to be quite enjoyable and time consuming. It also fortunately, so far, has been a theoretical income generator, obviously that could change at any moment.

With regards to opening a Roth IRA, I've thought about it and strongly am considering it but I am somewhat hesitant to put my money into something I really can't touch. I have been blessed with good health but I find myself really concerned about large medical bills, mainly dental, and having access to that money, only if i REALLY need it. I'm not saying Roth is out of the question but could it make more sense for someone like me to keep this money out of an IRA for the moment until I am earning more income and once I feel I'm in a place where I'm less concerned about a large unexpected cost I can move the money into an IRA?
Given the unrestricted principal withdrawal provisions, you could treat a roth as kind of a secondary emergency fund, and combine it with your stock-picking hobby. Lots of people with less income than you have, and more debt, have hobbies that are guaranteed to lose closer to 100%.

You can probably find some dental plans that aren't too costly, incidentally, separate from health insurance, although I'm not familiar with what's available in your state. Usually there's a per-year limit in the $2k range, but you usually get negotiated prices and sometimes get free preventive care that makes up for some of the premium. Are you saying you don't have medical insurance from your job? That's a bigger concern, and much bigger expense, than anything you've mentioned so far.
I was unaware of the unrestriced principal withdrawal provisions, I am looking into that now. I do have both medical and dental insurance but the dental is 1k max a year and I have VERY bad teeth. I easily go over the 1k max every year.

Harold
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Re: Low Income 29yr old

Post by Harold » Sun Dec 15, 2013 5:07 pm

Watty wrote:Don't get down on yourself, it might not match your typical poster here but the average household income in the US is only about $55,000 so your income is doing OK for your age especially since it looks like you don't have any debt.
Even more accurately, the median income for full-time workers in the US is under $40K -- he's not even that far from the median.
chevchase wrote:just wanted some thoughts/insight into my terrible financial situation
As put above, you're not in a terrible financial situation (at least relative to the rest of the US). Granted you're in the NYC metro area, but even there median incomes aren't as high as you might think by hearing from all the high earners. Even better, you've got close to no debt.

If I were you, I'd make an even more basic decision that's going to involve some hard choices (particularly at your income level). Since the element of investing success that far transcends all other aspects is the savings rate -- before doing anything else, decide how much you want to save. If your number is say $10K a year, then that means you find a way to live on $22K a year. That may sound impossible, but somebody's doing it. If you decide saving that much would force you to give up something you would rather spend the money on -- that's cool, just recognize that you are making a decision not to save/invest in favor of whatever it is you're spending the money on. The obvious next step, if you feel you are facing very hard choices, is to find a way to make more money.

To me it actually looks like you are in fine shape given your employment level. You're saving and near debt free. Keep it up.

chevchase
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Re: Low Income 29yr old

Post by chevchase » Sun Dec 15, 2013 5:31 pm

Harold wrote:Since the element of investing success that far transcends all other aspects is the savings rate -- before doing anything else, decide how much you want to save. If your number is say $10K a year, then that means you find a way to live on $22K a year.
When you suggest saving 10k/year is that including the 403(b) contributions? The reason I ask is because when all is said and done I think after everything is taken out of of my paycheck, taxes, SS, insurance, transit, 403b. I'm taking home like 21k. I also have roughly 9-10k of fixed expenses(rent, utilities, cell phone). That leaves me 11k to live on for the year.

Maybe its just perception but living in New York City and making 32k at my age feels grossly below my earning potential. Obviously working for a non-profit is not the best way to earn a living.

Harold
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Re: Low Income 29yr old

Post by Harold » Sun Dec 15, 2013 5:42 pm

chevchase wrote:When you suggest saving 10k/year is that including the 403(b) contributions?
The 10K was just a number. You can pick whatever number you'd like.

But yes it includes the 403(b) contributions. I'm using saving in the economic sense -- any income that you are not consuming. Also if you're saving $X, the $32K-$X would cover your taxes, insurance, transit, food, rent, and other expenses. The "fixed" expenses you mentioned can obviously change depending on choices you make.

No doubt there are other jobs you could have with higher salaries that would make it financially easier. Surely though, you're getting something non-monetary out of working for the non-profit. And only you know what kind of life you'd like to lead.

lostInFinance
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Re: Low Income 29yr old

Post by lostInFinance » Sun Dec 15, 2013 6:44 pm

chevchase wrote:
When you suggest saving 10k/year is that including the 403(b) contributions? The reason I ask is because when all is said and done I think after everything is taken out of of my paycheck, taxes, SS, insurance, transit, 403b. I'm taking home like 21k. I also have roughly 9-10k of fixed expenses(rent, utilities, cell phone). That leaves me 11k to live on for the year.

Maybe its just perception but living in New York City and making 32k at my age feels grossly below my earning potential. Obviously working for a non-profit is not the best way to earn a living.
The median income in NYC for a full time year-round worker is only about $45k, so $32k at your age is reasonable. I'm sure you're not going to take this advice, but I would either 1) get a private sector job or 2) move to a lower cost of living location. I don't really understand what about NYC makes its exorbitant rents worth paying and on $32k a year, I doubt you have much left over for the nicer bars/restaurants/etc?

02sbxstr
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Re: Low Income 29yr old

Post by 02sbxstr » Sun Dec 15, 2013 7:22 pm

"You need to follow format in Asking Questions"

What an arrogant response!! The poster is searching for advice and you see fit to denigrate a young person for not formulating a query in your preferred context? Shame on you. To the original poster. Stay the course. We started saving $20 a week when we were 22 and have built it to 7 figures in 35 years. It can be done. pay yourselves first. Don't shoot for the moon. Good Luck!

tibbitts
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Re: Low Income 29yr old

Post by tibbitts » Mon Dec 16, 2013 8:53 am

chevchase wrote:
Harold wrote:Since the element of investing success that far transcends all other aspects is the savings rate -- before doing anything else, decide how much you want to save. If your number is say $10K a year, then that means you find a way to live on $22K a year.
When you suggest saving 10k/year is that including the 403(b) contributions? The reason I ask is because when all is said and done I think after everything is taken out of of my paycheck, taxes, SS, insurance, transit, 403b. I'm taking home like 21k. I also have roughly 9-10k of fixed expenses(rent, utilities, cell phone). That leaves me 11k to live on for the year.

Maybe its just perception but living in New York City and making 32k at my age feels grossly below my earning potential. Obviously working for a non-profit is not the best way to earn a living.
It's mostly perception, unless you actually have some extraordinary talent, ability, or luck. Your problem is you're posting on a forum filled with people who have extraordinary talent, ability, or luck, and that can get a little discouraging.

I've worked in for-profits and not-for-profits, and the same person will tend to earn about the same in both, when everything is factored in.

pkcrafter
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Re: Low Income 29yr old

Post by pkcrafter » Fri Feb 24, 2017 8:09 pm

Welcome chevchase,

Your 401k plan is probably around average in expense. You have the TAP index fund (S&P500) with an ER of O.65%, which is high , but with the match it becomes much more attractive. We like to suggest a person invest up to the match and then if there is any money left, use a Roth or TIRA. We also recommend you look at all holdings/all accounts as one portfolio. That allows you to use the TAP index fund and then use Roth to fill out the rest of the portfolio. Your bond fund options are also too expensive.

Another idea is to simply use a Blackrock LP fund, which is already diversified, but cost is higher, and then you could use one in the Roth as well. Vanguard TR date funds have a $1,000 min.

The motif idea is going to cost you more as well unless you do it on your own. I would not recommend getting involved with Motif Investing Co. If you want a complex slice and dice portfolio, you need to save up until you can meet minimums or you could use ETFs, and you need to ramp up on education before you even think about advanced portfolios.

With your income, a very good saving rate would be 15% ($4800/year), a good saving rate would be about $3500/year. The most important thing is to get started early, which you are doing. There is another important point too
With regards to opening a Roth IRA, I've thought about it and strongly am considering it but I am somewhat hesitant to put my money into something I really can't touch.

This really is not a good way to look at your retirement savings--you do not want to touch it. You are young and have the power of long term compounding going for you. Don't mess it up. Retirement accounts are for retirement. Period.

The first thing you need to do now is create an investment policy statement (IPS), which I will call a contract.

https://www.bogleheads.org/wiki/Investm ... _statement

You are doing very well, just continue ramping up on the learning curve.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

binvesting
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Re: Low Income 29yr old

Post by binvesting » Fri Feb 24, 2017 8:47 pm

chevchase wrote:I think its a healthy debate/question whether it makes sense for me to have this play money/investment. I view it as a hobby with the potential to lose some money(hopefully not all of it). But in terms of a hobby, its something that I check on every day and spend a lot of time thinking about, I find considering different ETFs and stocks to be quite enjoyable and time consuming. It also fortunately, so far, has been a theoretical income generator, obviously that could change at any moment.
OP, reg the hobby part and picking stocks - i understand that it'll be on a small scale and you find it enjoyable - but i would suggest you not do at all it for three reasons 1. losing money; 2. more importantly losing sleep (as in thinking too much about it. you'll get new ideas everyday and it'll be a never ending process) 3. and most importantly, losing time (its not an advise, but sharing my experience as a dad of 2 kids that folks get busier in life as commitments grow like having a family, so the freedom of young age is precious :D so at your age, i would spend the time on yourself, ex: learning something that makes you happy or learning skills to increase income etc)
Just my 2 cents. Cheers and good luck. :sharebeer

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reriodan
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Re: Low Income 29yr old

Post by reriodan » Fri Feb 24, 2017 9:04 pm

The story from Boglheads Guide to Investing seems fitting here:
In February 2005, Jack Bogle and a small number of Bogleheads met for an informal dinner in Orlando, Florida. During the course of the dinner, Mr. Bogle mentioned receiving a letter from a Vanguard shareholder some weeks back. The person writing reported that he had been investing since the mid 1970s with Vanguard. Since that time, the value of his portfolio had grown to $1,250,000. But here is the interesting part: He never earned more than $25,000 per year in his lifetime.

Did that get your attention?

You may be asking, "How is that possible? Is he a stock market wizard? Did he have a great advisor? Did he win the lottery? Did he rob a bank? Did he inherit a bundle? Was he just lucky?"

We don't know the person or anything about his investment history. But the likely truth is that he accumulated a small fortune through consistently saving and investing over time. Anyone can do it, although few choose to do it. It turns out that an investment of $601 at the beginning of each month in stock market index funds, coupled with an average annual return of 10 percent, grows to the sum of $1,249, 655 in 30 yers. Incidentally, $601 a month is approximately 28.9 percent of a yearly salary of $25,000. And in case you might be wondering, yes, the math works the same for everybody.
I'd just say, with your income, save the fun money for stuff that is actually fun.

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BL
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Re: Low Income 29yr old

Post by BL » Fri Feb 24, 2017 9:06 pm

You have received some very good suggestions from which to select what will work best for you. Knowing ERs can be very important in decision-making. Using the single index fund in the 403b and perhaps a V. Target fund in Roth would be one good way to start investing.

It sounds like you have done very well and I congratulate you on it.

It would be great to do some reading: "Getting Started" in the Wiki,
also here is a pdf full of great ideas for new investors:
https://www.etf.com/docs/IfYouCan.pdf

ivk5
Posts: 459
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Re: Low Income 29yr old

Post by ivk5 » Sat Feb 25, 2017 8:30 am

3+yo thread

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