New to Investing. $25,000 to Invest.

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Topic Author
dfonley
Posts: 11
Joined: Wed Jun 28, 2017 10:14 am

New to Investing. $25,000 to Invest.

Post by dfonley »

I am 29 years old. I just started Investing and saving. Any help for asset allocation would be helpful. I am open to options and suggestions stock, etfs, bonds, mutal funds. Main reason for investing is retirement.

Mortgage 126,000 - 3.5%
Auto - 19,000 - 4.5%
No school debt
No credit card debt
Savings - 46,000
Income - 55,500
Job is stable.
After bills and expenses every month - 1,000 to invest if I chose.

Vanguard brokerage account - 10,000 just sitting there.
Roth IRA 5,500 - 34 shares VYM and 33 shares of VNQ
Vanguard taxable account - 59 shares BRKB (can always sell some off).
401k - 1,000 all in VINIX ( just started job).
They put in 3% and I am putting in 15% ( i can do more). Its through fidelity. The accounts they have are as follows:

Exp Ratio
VANGUARD INST INDEX (VINIX) - .04
DH LARGE CAP I (DHLRX) - .68
TRP GROWTH STOCK (PRGFX) - .68
AMG TS MID CAP GTH Z (TMDIX) - 1.04
ARTISAN MID CAP VAL (ARTQX) - 1.16
VANG MIDCAP IDX INST (VMCIX) - .05
DFA US TARGET VALUE (DFFVX) - .37
LD ABBETT DEV GRTH I (LADYX) - .74
VANGUARD INTL VALUE (VTRIX) - .43
BTC LIFEPATH 2020 J- .16
BTC LIFEPATH 2025 J - .16
BTC LIFEPATH 2030 J - .16
BTC LIFEPATH 2035 J - .16
BTC LIFEPATH 2040 J - .16
BTC LIFEPATH 2050 J - .16
BTC LIFEPATH 2055 J - .16
BTC LIFEPATH 2060 J - .16
BTC LIFEPATH RET J - .16
DODGE & COX BALANCED (DODBX) - .53
PIM TOTAL RT INST (PTTRX) - Bonds - .47
MELLON STABLE VAL - Bonds - .41
Last edited by dfonley on Sat Jul 01, 2017 9:53 am, edited 2 times in total.
Thesaints
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Re: New to Investing. $25,000 to Invest.

Post by Thesaints »

dfonley wrote:.... Im think 90/10 or 80/20 for AA.
Why ?

The question you need to answer is what you want to do with those 25k, your investment gains (hopefully), and when.
Without that information is not possible to say if you should invest 100% in Nepalese stocks, 100% in a savings account, or anything in between.
crazcarl
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Joined: Wed Jun 28, 2017 11:27 am

Re: New to Investing. $25,000 to Invest.

Post by crazcarl »

I would set your 401k to max out for the year, and use the savings to supplement the income.
Topic Author
dfonley
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Joined: Wed Jun 28, 2017 10:14 am

Re: New to Investing. $25,000 to Invest.

Post by dfonley »

Because that's what vanguard suggested at my age. As I said I open to suggestions. I am investing for retirement years down the road.
Thesaints
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Re: New to Investing. $25,000 to Invest.

Post by Thesaints »

If you are investing for retirement several decades from now, sure! Actually, why not 100% stocks ?
Also, you probably want substantial exposure to foreign markets, which neither bershire, no the S&P have.
It would be bad if several decades down the road it turned out that it was that half of the investing world which outperformed.
Topic Author
dfonley
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Joined: Wed Jun 28, 2017 10:14 am

Re: New to Investing. $25,000 to Invest.

Post by dfonley »

I agree 100% stocks would be fine. I understand that foreign stock is good to have also. I also said that I have $20,000 to split up anyway that works.
Thesaints
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Re: New to Investing. $25,000 to Invest.

Post by Thesaints »

dfonley wrote:I agree 100% stocks would be fine. I understand that foreign stock is good to have also. I also said that I have $20,000 to split up anyway that works.
If you are investing outside your 401k, vanguard has total world stock market funds and etf.
Within the choices in your 401k it is a little harder; gotta pay attention to expense ratios. Maybe with the 3 vanguard funds you can get somewhat close.
radiowave
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Re: New to Investing. $25,000 to Invest.

Post by radiowave »

One short term option in the Ally Bank 11 mo no penalty CD at 1.50% yield. $25,000 minimum deposit, after 6 days you can withdraw all of your money if needed. This one is almost a no brainer.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page
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bigROI
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Re: New to Investing. $25,000 to Invest.

Post by bigROI »

I would keep at least 15-20k highly available, perhaps the Ally CD or the like and max out the 401k till you use up the other 5-10k then dial it back and keep the course with whatever you prefer. An 30 80/20 seems pretty good. I would keep it simple with 60% VINIX 20 % VTRIX and maybe a split 10%/10% of PIM TOTAL RT INST (PTTRX) - Bonds MELLON STABLE VAL - Bonds . Down the line when you have 100k or so you can slice and dice to match medium and small business percentages of the market along with international bond diversification. This will all open up when you have more assets in your Roth to work with and you can leave your core in the 401k for just the ones that have the lowest ER (probably VINIX & VTRIX).
A penny saved is much more then a penny earned when you consider the tax/SS/medicare cut.
CantPassAgain
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Re: New to Investing. $25,000 to Invest.

Post by CantPassAgain »

dfonley wrote:I am 29 years old. I just started Investing and saving. Any help would be appreciated. Im think 90/10 or 80/20 for AA. I am open to options and suggestions.I have looked into BRKB and VFIAX to buy as my top accounts. I also make $55,500 a year.

I maxed out Roth IRA for the year - 34 shares VYM and 33 shares of VNQ in it.
I have $20,000 sitting in vanguard brokerage account waiting to buy stock.
I have a 401k. They put in 3% and I am putting in 3% ( i can do more). Its through fidelity. The accounts they have are as follows:

VANGUARD INST INDEX (VINIX) - I currently have 100% into this. Willing to move to another stock if it benefits me.
DH LARGE CAP I (DHLRX)
TRP GROWTH STOCK (PRGFX)
AMG TS MID CAP GTH Z (TMDIX)
ARTISAN MID CAP VAL (ARTQX)
VANG MIDCAP IDX INST (VMCIX)
DFA US TARGET VALUE (DFFVX)
LD ABBETT DEV GRTH I (LADYX)
VANGUARD INTL VALUE (VTRIX)
BTC LIFEPATH 2020 J
BTC LIFEPATH 2025 J
BTC LIFEPATH 2030 J
BTC LIFEPATH 2035 J
BTC LIFEPATH 2040 J
BTC LIFEPATH 2050 J
BTC LIFEPATH 2055 J
BTC LIFEPATH 2060 J
BTC LIFEPATH RET J
DODGE & COX BALANCED (DODBX) -
PIM TOTAL RT INST (PTTRX) - Bonds
MELLON STABLE VAL - Bonds
The information provided and the way this post is phrased make me think you might need to back up and do a little reading first.

Start here:
https://www.bogleheads.org/wiki/Getting_started

Then watch all of the videos here:
https://www.bogleheads.org/wiki/Video:B ... philosophy

Then you might want to read a book or two. The Boglehead's Guide To Investing is a pretty good one.

Also know there is a difference between an "account", a "stock," a "mutual fund," and an "Exchange Traded Fund (ETF)." The way you worded your post looks like you may be getting all of these mixed up.
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ruralavalon
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Location: Illinois

Re: New to Investing. $25,000 to Invest.

Post by ruralavalon »

Welcome to the forum :) .

You have some great to see anyone starting young at saving and investing. It's good to see that you are getting the full employer match offered in your 401k , and that you are making the maximum annual contribution to the Roth IRA.

You have some nice fund choices offered in your 401k, you are fortunate.
dfonley wrote:I am 29 years old. I just started Investing and saving. Any help would be appreciated. Im think 90/10 or 80/20 for AA. I am open to options and suggestions.I have looked into BRKB and VFIAX to buy as my top accounts. I also make $55,500 a year.

I maxed out Roth IRA for the year - 34 shares VYM and 33 shares of VNQ in it.
I have $20,000 sitting in vanguard brokerage account waiting to buy stock.
I have a 401k. They put in 3% and I am putting in 3% ( i can do more). Its through fidelity. The accounts they have are as follows:

VANGUARD INST INDEX (VINIX) - I currently have 100% into this. Willing to move to another stock if it benefits me.
DH LARGE CAP I (DHLRX)
TRP GROWTH STOCK (PRGFX)
AMG TS MID CAP GTH Z (TMDIX)
ARTISAN MID CAP VAL (ARTQX)
VANG MIDCAP IDX INST (VMCIX)
DFA US TARGET VALUE (DFFVX)
LD ABBETT DEV GRTH I (LADYX)
VANGUARD INTL VALUE (VTRIX)
BTC LIFEPATH 2020 J
BTC LIFEPATH 2025 J
BTC LIFEPATH 2030 J
BTC LIFEPATH 2035 J
BTC LIFEPATH 2040 J
BTC LIFEPATH 2050 J
BTC LIFEPATH 2055 J
BTC LIFEPATH 2060 J
BTC LIFEPATH RET J
DODGE & COX BALANCED (DODBX) -
PIM TOTAL RT INST (PTTRX) - Bonds
MELLON STABLE VAL - Bonds
In my opinion at age 29 a reasonable asset allocation would be 80/20 stocks/bonds. This is expected to substantially reduce volatility (risk), with only a relatively slight decrease in return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, "Never bear too much or too little risk", and "Asset allocation".

In my opinion 100% in stocks is a bad idea, 100% in anything is a bad idea.

I suggest using Vanguard 500 Index Fund Admiral Shares (VFIAX) rather than Berkshire Hathaway for domestic stocks. In your 401k Vanguard Institutional Index Fund (VINIX) is also a S&P 500 index fund, good to use for domestic stocks.

You should probably increase your contributions to your 401k, rather than start a taxable account.

Here is a wiki article you could read to start educating yourself: "Bogleheads® investment philosophy. For a quick overview of investing basics for the new person read Dr. Bernstein's short book, "If You Can".

. . . . . . .

Some additional information is needed.

Do you have any debt, if so what types, amounts and interest rates? (Sometimes the best "investment" is paying off higher interest debt.)

What is your tax bracket, both federal and state?

What are the expense ratios of the funds as offered in your 401k? (Sometimes the expense ratios charged in a 401k are different than the expense ratios charged the general public, so we can't just look them up.)

In your 401k are you allowed touse Fidelity's BrokerageLink, at no additional expense?

What is the interest rate being paid on the Mellon Stable Value Fund? (Sometimes, if the interest rate is high enough, a stable value fund can be a good substitute for a bond fund.)

About how much (in dollars) do you believe you might be able to contribute annually to investing (total, all accounts)?

You can simply add this to your original post using the edit button, it helps a lot if all of your information is in one place.
Last edited by ruralavalon on Fri Jun 30, 2017 2:52 pm, edited 2 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
retire57
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Re: New to Investing. $25,000 to Invest.

Post by retire57 »

Debt?

How stable is your job? A cash cushion of 3-6 months living expenses will save you should you become unemployed.

With no debt and a cash cushion, investing it all is a good idea. And good for you for being so careful with your financial decisions at such a young age!
Last edited by retire57 on Sat Jul 01, 2017 5:51 pm, edited 1 time in total.
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BeBH65
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Re: New to Investing. $25,000 to Invest.

Post by BeBH65 »

Hello dfonley,

Welcome to the forum.
You have already received good advise and some references to reading material.
To be able to give you good advise, we need some more info from you.
Please consider updating the opening post to the format describes in our wiki on Asking_portfolio_questions.
Also clearly indicates our timeline for this investment.

Regards,
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
Topic Author
dfonley
Posts: 11
Joined: Wed Jun 28, 2017 10:14 am

Re: New to Investing. $25,000 to Invest.

Post by dfonley »

Thanks for all the info. I have updated some information at the top as you guys suggested. If anything else is needed please let me know.
pkcrafter
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Re: New to Investing. $25,000 to Invest.

Post by pkcrafter »

I'm adding a +1 to ruralavalon's suggestions.

Use the 10k to increase your 401k contributions to 18k. You do that by increasing your contributions and then using some of the 10k to replace the lower monthly income.

Do you have an emergency account?

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.
Topic Author
dfonley
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Joined: Wed Jun 28, 2017 10:14 am

Re: New to Investing. $25,000 to Invest.

Post by dfonley »

Emergency fund is included in the 46,000 in savings.
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ruralavalon
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Location: Illinois

Re: New to Investing. $25,000 to Invest.

Post by ruralavalon »

What is your marginal tax rate, both federal and state?

What is the capital gain/loss status of your shares of Berkshire Hathaway stock? (I would not suggest selling that stock if it would create a significant income tax liability.)
dfonley wrote:Income - 55,500
Job is stable.
After bills and expenses every month - 1,000 to invest if I chose.
. . . . .
They put in 3% and I am putting in 15% ( i can do more).
Is that $1k per month to invest ($12k per year) in addition to what you contribute now, or the total you can contribute to investing?

Again you can simply add this to your original post using the edit button.

. . . . .

I suggest a portfolio of 20% bonds, 20% international stocks, and 60% domestic stocks. That is a target, don't be greatly concerned if you can't arrange the three accounts to get that exactly right at the start.

You currently have $17.5k + $10k in 59 BRKB shares in your three accounts. You have $25k of savings that you want to invest, and can invest about $1k additional from your paycheck every month. Here are a few ideas.

1) Increase your contributions to your 401k to the amount required to reach the maximum employee contribution of $18k per year. If necessary draw cash from savings to pay living expenses that you would otherwise have paid out of your paycheck.

2) Invest your 401k in a combination of --
Vanguard Institutional Index Fund (VINIX) ER 0.04% and
PIMCO Total Return Institutional (PTTRX) ER 0.47%
Exchange both existing balances and future contributions to those funds.

3) You have $12k you can invest annually. Each year the priority for contributions should probably be $5.5k to your Roth IRA, the rest to your 401k up to the employee maximum of $18k per year, and probably no additional contributions to the taxable account. Please see the wiki article "Prioritizing investments".

4) In the Roth IRA exchange your investments (20% of total portfolio; $5.5k) to one of these --
Vanguard Total Stock Market Index Fund,
Vanguard Total International Stock Index, or
Vanguard Total Bond Market Index Fund.
It is probably best to use the bond fund to start.

5) With the $10k extra cash sitting in the taxable account and any additional contributions to the taxable account buy --
Vanguard Total Stock Market Index Fund, and
Vanguard Total International Stock Index Fund.
Wiki article "Tax-efficient fund placement".

If you have any questions just ask.

I hope that this helps.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
indexonlyplease
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Re: New to Investing. $25,000 to Invest.

Post by indexonlyplease »

I would state take care of your debt. The car loan at 4.5% will kill your profits in your investments. After you pay the car you will have even more money to invest monthly.

Then follow ruralavaion recommendations. He is really good.
retire57
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Re: New to Investing. $25,000 to Invest.

Post by retire57 »

indexonlyplease wrote:I would state take care of your debt. The car loan at 4.5% will kill your profits in your investments. After you pay the car you will have even more money to invest monthly.
Agreed. Pay off that car debt immediately for a guaranteed return. Then you'll be in great shape, with even more $ to invest every month.
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BeBH65
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Re: New to Investing. $25,000 to Invest.

Post by BeBH65 »

dfonley wrote:Thanks for all the info. I have updated some information at the top as you guys suggested. If anything else is needed please let me know.
Hello dfonley,

What are you tax rates?
What is the size of the emergency funds, what is the destination of the other $ in yr saving?
What are your current respective contributions in $?
Please update yr opening post.

Based on the partial info in your opening post:
- augment yr 401 contributions to ensure 18k by the end of the year - this should also save on yr taxes
- pay off car debt
- ensure you schedule to find your IRA for 2017

With the extra info we will then be able to give you advise for your existing investments as well as your additional remaining contributions.

Regards,
Last edited by BeBH65 on Sun Jul 02, 2017 6:34 am, edited 1 time in total.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
Eric76
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Re: New to Investing. $25,000 to Invest.

Post by Eric76 »

Thesaints wrote:If you are investing for retirement several decades from now, sure! Actually, why not 100% stocks ?
Also, you probably want substantial exposure to foreign markets, which neither bershire, no the S&P have.
It would be bad if several decades down the road it turned out that it was that half of the investing world which outperformed.
It's a perfectly reasonable approach to have entire equity position in S&P.
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