Youngish Guy behind in investing, I need guidance

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
IWnt2Trvl
Posts: 2
Joined: Tue Jan 26, 2016 10:31 am

Youngish Guy behind in investing, I need guidance

Post by IWnt2Trvl »

Hello All,

I'm in my mid 30's and I feel like I'm a little behind on properly investing my funds. I'm pretty good at saving ( some people call me a cheap skate) but I'm not too good at investing the money I've saved. I'm not too sure where to invest the money I've saved rather. I was doing some searching online and came across this site. I'm hoping you guys with more experience can point me in the right direction.

Currently the only debt I have is a credit card which I could pay off at any time ( I opened a new card with 12 months no interest, so I'm splitting the payments up, is it best for me just to pay it all off now?)

I have about $95k Cash saved in a money market savings. Few dollars a month earned on interest.
I have about $40k in Rollover IRA's : Split pretty much down the middle between 2 firms. I'm not sure if I should consolidate the two and bring them under one roof. Also I haven't contributed any money to them in many years. They were from old company IRA's.
I'm currently using the Acorns app to invest my "spare change" into their diversified portfolio. I opened it a little over a year ago. It's current value is $600 with about -10% total loss.
I recently invested $5k in fundrise.com eReit. I'd heard about it from some friends, it seemed like a good idea.
I've made the mistake of lending money to family and friends, and being taken advantage of in terms of the time I've allowed them to pay me back. So I should have a little money trickling in here and there throughout the year. ( No more lending from me until I get financially situated)

My question now is where should I go from here? I tried getting some advice from my Pa, but he's pretty much from the old school. Save save save and thats it. No real investment advice in terms of diversifying. It's worked well for him, but I'm not sure if that's the best advice. My goals are to be able to retire at an age where I can still enjoy my money, somehow get my money to work for me, and travel the world. I'm willing to put in the work and sacrifice to get there, just not sure where to start. I'm not Married, no kids, no mortgage so I figure I'd better start serious planning sooner than later. I'm open to any and all suggestions.

Thank you so much for reading my post and your time and help.

Oh My Goodness. First I want to thank all you you for the amazing responses. I did not expect to receive so many responses. I thought maybe 1 or 2.

Lets start with the first and work my way down.

Mhalley. Thank you for the links. I will make sure to read the PDF and I will go over the getting started page.
I had 2 old 401k with Fidelity Advisors. This week I moved it to a Rollover IRA, I just checked the website and noticed that it is now is FDIC-INSURED DEPOSIT SWEEP. The other old 401k was moved this morning from Fidelity net benefits to Merrill Edge, so currently its not invested in anything while the transfer takes place to Merrill Edge. Right now its listed as an IRRA edge account. 0.00 balance as I wait for the transfer.

3 Will have to read more about the 3 fund portfolio. This is the first time I'm hearing of it ( As I browsed through some of the other postings, I did see that a a recurring theme)

From the 95k I can set some of that aside for emergency funding. 12 - 13k should be sufficient. I can be frugal when I have to.

Thats what I'm trying to figure out. What taxable investment should I put that money in?

mattshwink:
My tax bracket is 25% taxable income is around 82k.
My company does not match, and I remember hearing years ago on some financial radio show that you are better off doing an IRA or some sort of other investment if your company does not match. I've been with my current company for about 3 years and they do not match, so I've just been saving until I could figure out what to do. From reading your post, I take it that you are suggesting that I put the max in my rollover IRA. As of this writing I have 2. Can I max out both? Or should I consolidate them and max out the one.

Regarding my credit card debt. Even though its 0% should I just pay it all off now to be done with it? I recently went on a trip to Japan and I put everything on the card so it got a little out of hand quickly. I just wanted the travel points.

If I lost my job for a year, I could probably survive off of about 24k - 30k. That is with no outside support. So it looks like I need to put in the max for IRA for last year and start making the payments for this year.

I bank with BofA so I was thinking that it might make more sense if I pull everything under ME so that I can see my whole financial status under one window. If Vangaurd is what is recommended, I am definitely open to moving funds to them. You guys are the experts. I am conservative with my spending. But in terms of investing, I'm willing to take some risks now that I don't really have any dependents. It's just me myself and I. I like the way you broke the investments down. How would it look if I wanted to be a little more aggressive?

In regards to fundrise. I will have to double check. I dont believe what I have can be invested in an IRA because its not a typical REIT, its an EREIT. ( dpnt wuote me here, but I will send an email to the company and find out. I will update once I get word back.

I definitely save save save, I never spend money just to spend. I currently save about 45% of my paycheck. I honestly could probably save a little more if I put my mind to it. I just want to make sure I'm investing it right for my future.

Once I can determine where the IRA's will go I will make sure to max them out. ( wish I had done it before) Should I open 401k with company even though they do not match?

hnzw rui:
Thank you for the confirmation

rurakavakin:

I will definitely read over the getting started guide, so that I wont ask too many questions that have already been answered.

Are you suggesting that I consolidate and move both IRA's to Vanguard? Should it be a ROth IRA or Rollover?

Realistically I should set aside 30k for a rainy day. I'm gong to need a car soon, but luckily I am not a car person so I can get by with the most minimum car out that can get me from A - B.

I do not have an allocation that I want to aim for. I have no idea where I should start. Now that I know what I should research, I will read up on it to have a better Idea.

before I had old 401k's. One with Net Benefits fidelity and one with advisor fidelity. I recently moved the net benefits to their Rollover IRA the symbol is CORE**
FDIC-INSURED DEPOSIT SWEEP, and I moved the advisor to merrill edge. ( its in the process of moving so its not invested in anything. My job does offer a 401k, however they do not match. I was under the impression that you shouldnt do a 401k if they dont match. So I did nothing but save for the past 3 years.


Again, everyone, thank you so much for all your help and advice. I feel like I'm finally on the right path to setting up my future. I honestly want to set the example for my nieces and nephews. My siblings unfortunately are all pretty much living from pay check to pay check with lots of debt. OS I learn a lot from them on what not to do.

Thanks again, I lok forward to your future advice :)
Last edited by IWnt2Trvl on Tue Jan 26, 2016 10:34 pm, edited 1 time in total.
mhalley
Posts: 10432
Joined: Tue Nov 20, 2007 5:02 am

Re: Youngish Guy behind in investing, I need guidance

Post by mhalley »

Welcome to the forum. A couple of good starting points:
The free pdf if you can. https://www.etf.com/docs/IfYouCan.pdf
The boglehead wiki getting started page: https://www.bogleheads.org/wiki/Getting_started
What do you have your iras invested in? The most common recommendation here is the 3 fund portfolio, ie total us stock market, total international stock market and total bond market, divided into an asset allocation that lets you sleep at night. In your thirties that would be something like 70-80 percent stocks and the rest bonds. International something like 20-40% of the stocks.
You should have about 3-6 months in an emergency fund, so perhaps you could put some of that 95k into investments in taxable, depending on when you will need the money .
mattshwink
Posts: 455
Joined: Mon Sep 21, 2015 10:01 am

Re: Youngish Guy behind in investing, I need guidance

Post by mattshwink »

mhalley's advice is a good starting point, I am going to try to go through your post and answer some of your specific questions. You don't really give enough information, though, for a complete analysis. Tax bracket?

You didn't say anything about a 401k. You say you are a saver, but it doesn't seem like you have a lot saved for retirement. I would direct savings toward that goal. If you have access to a 401k (or equivalent) you should be putting in enough to get the full match. Then Roth IRA ($5,500 per year, and you have until April 18th this year to contribute for 2015, then you can start on 2016 contributions).
IWnt2Trvl wrote:Hello All,

Currently the only debt I have is a credit card which I could pay off at any time ( I opened a new card with 12 months no interest, so I'm splitting the payments up, is it best for me just to pay it all off now?)
If 0%, I wouldn't worry, you have cash to cover. Just make sure you pay it off before it is due!
IWnt2Trvl wrote: I have about $95k Cash saved in a money market savings. Few dollars a month earned on interest.
This should be your emergency fund. General thinking is you should have 3-12 months expenses saved here in case something catastrophic happens (for example, losing your job). Make sure what you need to pay the credit card is here too. At your age, anything over 12 months should be invested (I would advise doing the IRA I suggested above).
IWnt2Trvl wrote: I have about $40k in Rollover IRA's : Split pretty much down the middle between 2 firms. I'm not sure if I should consolidate the two and bring them under one roof. Also I haven't contributed any money to them in many years. They were from old company IRA's.
I would consolidate into one IRA for simplicity. A lot of us here use Vanguard for their low expense funds. You need to figure out your risk tolerance, but it seems you are conservative, so I am going to say start with 70/30. So your 40K would look like this:
VTSAX Vanguard Total Stock Market 49% (~$19,600)
VTIAX Vanguard Total International Stock Market 21% (~$8,400)
VBTLX Vanguard Total Bond Market 30% (~$12,000)
IWnt2Trvl wrote: I'm currently using the Acorns app to invest my "spare change" into their diversified portfolio. I opened it a little over a year ago. It's current value is $600 with about -10% total loss.
I recently invested $5k in fundrise.com eReit. I'd heard about it from some friends, it seemed like a good idea.
If not funding an IRA, all money directed here should go to IRAs 1st (and 401ks). You should generally fill your tax advantaged space first. Fundrise can be held in an IRA, and it looks like to me the fees are low, although the fee structure is not entirely clear. You get REIT through VTSAX, but if you want to overweight REITs in your portfolio (I do) make sure it's no more than 10% of your overall stock allocation, which with a 70/30 allocation, would be 7% of the stock portion.
IWnt2Trvl wrote:My question now is where should I go from here? I tried getting some advice from my Pa, but he's pretty much from the old school. Save save save and thats it.
[/quote]
Honestly, saving is the most important part of the entire equation. A lot of people try chasing returns. You want to increase your returns? Increase your savings rate. So save save save is really good advice!

But in terms of investments, put $5,500 in your IRA per year (fund 2015 before April 18th, then start on 2016). If you have access to a 401k, use it! Once that is done, you can move on to taxable investments.
hnzw rui
Posts: 578
Joined: Tue Sep 22, 2015 2:26 pm

Re: Youngish Guy behind in investing, I need guidance

Post by hnzw rui »

mattshwink wrote:
IWnt2Trvl wrote:My question now is where should I go from here? I tried getting some advice from my Pa, but he's pretty much from the old school. Save save save and thats it.
Honestly, saving is the most important part of the entire equation. A lot of people try chasing returns. You want to increase your returns? Increase your savings rate. So save save save is really good advice!
+1. Saving $20K instead of $10K per year makes more difference than changing your asset allocation from 80/20 to 90/10 or 100/0.
User avatar
ruralavalon
Posts: 26352
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Youngish Guy behind in investing, I need guidance

Post by ruralavalon »

Welcome to the forum :) .

It's great that you are starting young, are almost debt free, and recognise the importance of a high savings rate. With about $140k in savings and investments you are already far ahead of your contemporaries.

You could start with reading the wiki article on "getting started", a link is provided below.

You could consider moving your IRAs to Vanguard, to use their broad selection of low expense ratio mutual funds. In investing both broad diversification (to decrease your risk) and low expenses (to increase your net return) are very important.

How much of that $95k would need to be set aside as an emergency fund to cover 3 months of your basic living expenses?

Do you have an asset allocation (stock/bond mix) that you think you want to aim for?

Where are your IRAs currently located, and what funds are they invested in? Do you have access to a work-based account like a 401k? If so what mutual funds are you using, and what are the mutual funds (fund names, tickers & expense ratios) offered in that work-based plan? Is there an employer match offered in your work-based plan? If so what is the employer match?

You can simply add that to your original post using the edit button, it helps a lot if all of your information is in one place. Please see the post "asking portfolio questions" for format.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Post Reply