New to Investing, I feel lost

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LifeIsElectric
Posts: 9
Joined: Thu Sep 20, 2018 10:53 am

New to Investing, I feel lost

Post by LifeIsElectric » Sat Sep 22, 2018 10:54 am

Hi guys, I am inexperienced to investing. Truth is, this is a new world to me (I wasn't born in the US but currently reside in it). I am barely in my early 20s, and have always lived on <$10K/year, but God has granted me the joy of having no student debt, mortgage, or any other debt. This is relevant because I just got a job position, and I will be making ~$45K/year, which is absolutely nuts. It's so much money. The way I see it, I can live a year with $7K, set funds aside for an emergency, and invest a good percentage of what's left.

Two weeks ago I came across Jack's ideas on index funds by chance, and I realized it has the appearance of an opportunity that is too good to pass. So for the first time I tried to educate myself about financial market investing.

This is where I have an issue. I read the beginner's guide, and have been reading some books that are recommended in this site. It all is great, but I think I've reached a plateau. I don't know where to move, or what to do next. Every time I look at the calendar I feel that I am behind on everything, and my heart wants to rush into investing, but in my spirit I know I need to calm down and set up a strategy and analyze the field.

If you were in my position, what would you do? I just need a few words to be honest--something I could use to lead on and find the way, because I really don't know what to do. Should I just keep on reading? I am also dead-worried about taxation.

A little info about me:
  • Early 20s
    Single, no dependents
    Will earn $45K/year
    Can live with $7K/year
    No major expenses (only transportation, gym, and food)
    No debt of any kind (only car payments, but my prior savings have the full amount covered)
My job will offer 403b, but won't match until 2nd year (job offers Fidelity, and I plan to use it). I want to allocate all my investments into index funds, but how? I have a feeling that the 403b account won't be enough, so I've been interested about opening an independent account with vanguard (401K maybe?)

What do you guys think?

I apologize if this post looks like the ramblings of a 20-something year old haha, because that's partly true.



Edit: I just want to thank everyone, this has been helpful and somewhat cathartic? I love this community
Last edited by LifeIsElectric on Sat Sep 22, 2018 2:43 pm, edited 1 time in total.

HEDGEFUNDIE
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Joined: Sun Oct 22, 2017 2:06 pm

Re: New to Investing, I feel lost

Post by HEDGEFUNDIE » Sat Sep 22, 2018 11:13 am

How are you able to live on $600/month? How much do you pay for rent?

Howard Donnelly
Posts: 477
Joined: Tue Dec 14, 2010 3:19 pm

Re: New to Investing, I feel lost

Post by Howard Donnelly » Sat Sep 22, 2018 11:21 am

Do yourself a favor and order a copy of, "The Millionaire in You," by Michael LeBoeuf. It will give you a solid game plan for investing and reaching financial independence.

PFInterest
Posts: 2554
Joined: Sun Jan 08, 2017 12:25 pm

Re: New to Investing, I feel lost

Post by PFInterest » Sat Sep 22, 2018 11:25 am

LifeIsElectric wrote:
Sat Sep 22, 2018 10:54 am
Will earn $45K/year
Can live with $7K/year
um what?
you get 18.5K in your 401k, and 5.5K in your IRA.

LifeIsElectric
Posts: 9
Joined: Thu Sep 20, 2018 10:53 am

Re: New to Investing, I feel lost

Post by LifeIsElectric » Sat Sep 22, 2018 11:26 am

HEDGEFUNDIE wrote:
Sat Sep 22, 2018 11:13 am
How are you able to live on $600/month? How much do you pay for rent?
I have my own house. It's not a mansion, but it has everything I need.
In a month I spend about ~$200 on utilities, $70 gas, $200 food

User avatar
Taylor Larimore
Advisory Board
Posts: 27512
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: New to Investing, I feel lost

Post by Taylor Larimore » Sat Sep 22, 2018 11:29 am

LifeIsElectric:

Welcome to the Bogleheads Forum!

Please list the funds available in your 403b. Show: Name of Fund, Ticker Symbol, Expense Ratio.

In the meantime, read about the benefits of The Three-Fund Portfolio.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

dknightd
Posts: 954
Joined: Wed Mar 07, 2018 11:57 am

Re: New to Investing, I feel lost

Post by dknightd » Sat Sep 22, 2018 11:31 am

Put your money in the bank till you have enough to feel comfortable. Then go from there. Match what your employer will give you. Spend less than you earn. You'll be fine

HEDGEFUNDIE
Posts: 986
Joined: Sun Oct 22, 2017 2:06 pm

Re: New to Investing, I feel lost

Post by HEDGEFUNDIE » Sat Sep 22, 2018 11:35 am

LifeIsElectric wrote:
Sat Sep 22, 2018 11:26 am
HEDGEFUNDIE wrote:
Sat Sep 22, 2018 11:13 am
How are you able to live on $600/month? How much do you pay for rent?
I have my own house. It's not a mansion, but it has everything I need.
In a month I spend about ~$200 on utilities, $70 gas, $200 food
No mortgage or property tax on the house? Car insurance?

Fallible
Posts: 6536
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: New to Investing, I feel lost

Post by Fallible » Sat Sep 22, 2018 11:37 am

Welcome to the forum! You are off to a solid start.

It's a bit difficult to know where you are "stuck," so we could use more specifics, such as how much you have in savings and where you stand on choosing an asset allocation.

In addition to books, have you read the BH wiki on "Getting Started" and "Asset Allocation"?

https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Asset_allocation
Bogleheads® wiki | Investing Advice Inspired by Jack Bogle

EdLaFave
Posts: 334
Joined: Fri Dec 26, 2014 2:31 am

Re: New to Investing, I feel lost

Post by EdLaFave » Sat Sep 22, 2018 11:45 am

I'd like to know how you survive on so little. I'm a bit of a minimalist, but that doesn't seem possible when rent for a 1 bedroom in my city is 13k.

If you're still in the reading phase you may want to check on this Investing 101 page. It covers the fundamentals nicely.

If you have a 403b, list the fund choices. Also, many folks who have a 403b also have access to a 457b, do you? If so list those fund choices.

It sounds like you should familiarize yourself with the various types of accounts:

401k = Plan offered through employer, $18,500 max contribution per year.
403b = Same
457b = Same
IRA = Plan you open, fund, and maintain on your own, $5,500 max contribution per year pending income restrictions.
HSA = Plan you can treat like an IRA if you have a qualified high deductible health plan, $3,450 max contribution per year.
Taxable = Plan you open, fund, and maintain on your own...unlimited contributions but doesn't receive favorable tax treatment as the plans listed above do.

...there are some other types of accounts, but those are the major ones.

The accounts that receive favorable tax treatment (401k, 403b, 457b, etc) often come in either Traditional or Roth. You should familiarize yourself with the difference between the two. I believe most people will pay less tax if they use a Traditional. My reasoning for that opinion was laid out nicely in this blog post.

Based on what you've said, put $18,500 in the 403b, $5,500 in an IRA, and put the rest in a taxable account.

Create a 3 fund portfolio or invest in an all-in-one fund (like Vanguard's TargetDate or LifeStrategy funds) that essentially creates the 3 fund portfolio for you.

Remember to think of your portfolio as the summation of all accounts. In other words, each account doesn't have to be a stand alone portfolio...if it is cheaper to own domestic stock in a 403b and it is cheaper to own bonds and international stock in your IRA then do that as long as you're meeting your overall asset allocation.

22twain
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Joined: Thu May 10, 2012 5:42 pm

Re: New to Investing, I feel lost

Post by 22twain » Sat Sep 22, 2018 12:08 pm

HEDGEFUNDIE wrote:
Sat Sep 22, 2018 11:35 am
LifeIsElectric wrote:
Sat Sep 22, 2018 11:26 am
HEDGEFUNDIE wrote:
Sat Sep 22, 2018 11:13 am
How are you able to live on $600/month? How much do you pay for rent?
I have my own house. It's not a mansion, but it has everything I need.
In a month I spend about ~$200 on utilities, $70 gas, $200 food
No mortgage or property tax on the house? Car insurance?
Home insurance?

And is the $45K per year your gross pay (before taxes and other withholding), or your take-home pay? If it's your gross pay, it will be reduced by withholding for federal and state income tax, Social Security and Medicare, probably health insurance (your employer provides health insurance, right?), and maybe other things.

Looking back at one of my old monthly pay-slips before I retired, I see gross pay of about $5000, from which about 25% was withheld, not including my voluntary 403B contributions.
My investing princiPLEs do not include absolutely preserving princiPAL.

Marjimmy
Posts: 150
Joined: Tue Nov 13, 2012 11:14 pm

Re: New to Investing, I feel lost

Post by Marjimmy » Sat Sep 22, 2018 12:21 pm

$200 a month on food?

How....

Thats $6.66 a day.... or a little over $2 a meal?
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

LifeIsElectric
Posts: 9
Joined: Thu Sep 20, 2018 10:53 am

Re: New to Investing, I feel lost

Post by LifeIsElectric » Sat Sep 22, 2018 12:30 pm

HEDGEFUNDIE wrote:
Sat Sep 22, 2018 11:35 am
No mortgage or property tax on the house? Car insurance?
No mortgage, the place is 100% mine.
Property tax is minimal because the value of my house is very low.
Car insurance is about $100

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mrspock
Posts: 93
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: New to Investing, I feel lost

Post by mrspock » Sat Sep 22, 2018 12:43 pm

LifeIsElectric wrote:
Sat Sep 22, 2018 10:54 am
Hi guys, I am inexperienced to investing. Truth is, this is a new world to me (I wasn't born in the US but currently reside in it). I am barely in my early 20s, and have always lived on <$10K/year, but God has granted me the joy of having no student debt, mortgage, or any other debt. This is relevant because I just got a job position, and I will be making ~$45K/year, which is absolutely nuts. It's so much money. The way I see it, I can live a year with $7K, set funds aside for an emergency, and invest a good percentage of what's left.

Two weeks ago I came across Jack's ideas on index funds by chance, and I realized it has the appearance of an opportunity that is too good to pass. So for the first time I tried to educate myself about financial market investing.

This is where I have an issue. I read the beginner's guide, and have been reading some books that are recommended in this site. It all is great, but I think I've reached a plateau. I don't know where to move, or what to do next. Every time I look at the calendar I feel that I am behind on everything, and my heart wants to rush into investing, but in my spirit I know I need to calm down and set up a strategy and analyze the field.

If you were in my position, what would you do? I just need a few words to be honest--something I could use to lead on and find the way, because I really don't know what to do. Should I just keep on reading? I am also dead-worried about taxation.

A little info about me:
  • Early 20s
    Single, no dependents
    Will earn $45K/year
    Can live with $7K/year
    No major expenses (only transportation, gym, and food)
    No debt of any kind (only car payments, but my prior savings have the full amount covered)
My job will offer 403b, but won't match until 2nd year (job offers Fidelity, and I plan to use it). I want to allocate all my investments into index funds, but how? I have a feeling that the 403b account won't be enough, so I've been interested about opening an independent account with vanguard (401K maybe?)

What do you guys think?

I apologize if this post looks like the ramblings of a 20-something year old haha, because that's partly true.
I’ll just answer your question :). At your age put 80% into a total market and/or S&P 500 index fund, VOO or VTI work well (or similarly offered at Fidelity), just make sure management fees (MER) are low (<.15%), the other 20% into a bond fund like BND.

Alternately since you are very young, even 100% VOO or VTI would be fine. Do this upto the maximum allowed in your 401k/403b or 18.5k.

Now... once you’ve done this... take a deep breath... you are in better shape than 80-90% of folks your age. Now go read the Boglehead bible “Common Sense on Mutual Funds” by Jack Bogle or various other books folks on here will suggest. Once you learn more, tweak your investment plan as desired, start learning about IRAs and Roth’s, taxable vs tax deferred trade offs, international equity allocation (many opinions... figure out what yours is) etc.

Good luck!

LifeIsElectric
Posts: 9
Joined: Thu Sep 20, 2018 10:53 am

Re: New to Investing, I feel lost

Post by LifeIsElectric » Sat Sep 22, 2018 12:44 pm

EdLaFave wrote:
Sat Sep 22, 2018 11:45 am
I'd like to know how you survive on so little. I'm a bit of a minimalist, but that doesn't seem possible when rent for a 1 bedroom in my city is 13k.
I don't have crazy expenses and I always try to use my money wisely. I own my own place and it's small, but four walls and a roof will always do, so rent isn't killing me. I don't live in a expensive area either, just a small TX town. When it comes to food I buy grains (rice, beans, etc), potatoes, etc... every week I buy groceries it's about $30 for a lot of vegetables and meat. It also helps that I live 10 mins from work, so gas is a max of $15 for a full tank every week. Sometimes I spend $20 of gas for 2 weeks. Also, I am seeing someone, and she likes to cook things for me, so my food money stretches even further. I am sort of a jack of all trades, and I fix my own things when they break (electrical, plumbing, mechanical, etc).

lostdog
Posts: 1241
Joined: Thu Feb 04, 2016 2:15 pm

Re: New to Investing, I feel lost

Post by lostdog » Sat Sep 22, 2018 12:47 pm

Nice job man.

Max out your 403b and Roth IRA.

Since you're young and will not have extra for taxable account for awhile, open a Roth account at Vanguard and pick the latest target retirement fund.

I think it's the Vanguard Target Retirement 2065 fund. Put the max Roth contribution into that account every year. Mirror the allocation of that fund in your 403b with 3 or 4 separate funds. Most likely there won't be an international bond but who cares because the other 3 will be fine.

If there are crappy high cost funds but you see a total market or s&p500 fund, just put your contribution into one of those and that will do fine on the over the long term. Add bonds once you start getting into your 40's.
Last edited by lostdog on Sat Sep 22, 2018 12:51 pm, edited 1 time in total.

lostdog
Posts: 1241
Joined: Thu Feb 04, 2016 2:15 pm

Re: New to Investing, I feel lost

Post by lostdog » Sat Sep 22, 2018 12:49 pm

LifeIsElectric wrote:
Sat Sep 22, 2018 12:44 pm
EdLaFave wrote:
Sat Sep 22, 2018 11:45 am
I'd like to know how you survive on so little. I'm a bit of a minimalist, but that doesn't seem possible when rent for a 1 bedroom in my city is 13k.
I don't have crazy expenses and I always try to use my money wisely. I own my own place and it's small, but four walls and a roof will always do, so rent isn't killing me. I don't live in a expensive area either, just a small TX town. When it comes to food I buy grains (rice, beans, etc), potatoes, etc... every week I buy groceries it's about $30 for a lot of vegetables and meat. It also helps that I live 10 mins from work, so gas is a max of $15 for a full tank every week. Sometimes I spend $20 of gas for 2 weeks. Also, I am seeing someone, and she likes to cook things for me, so my food money stretches even further. I am sort of a jack of all trades, and I fix my own things when they break (electrical, plumbing, mechanical, etc).

You're from another country correct? Most from other countries especially 3rd world can live in very little and be content. I am happy for you. 45k is a great start. Keep up the good work.

LifeIsElectric
Posts: 9
Joined: Thu Sep 20, 2018 10:53 am

Re: New to Investing, I feel lost

Post by LifeIsElectric » Sat Sep 22, 2018 12:51 pm

22twain wrote:
Sat Sep 22, 2018 12:08 pm
Home insurance?

And is the $45K per year your gross pay (before taxes and other withholding), or your take-home pay? If it's your gross pay, it will be reduced by withholding for federal and state income tax, Social Security and Medicare, probably health insurance (your employer provides health insurance, right?), and maybe other things.

Looking back at one of my old monthly pay-slips before I retired, I see gross pay of about $5000, from which about 25% was withheld, not including my voluntary 403B contributions.
No home insurance hehe

Gross will be about 55K, so I am considering 45K home take sounds about right. I realize I will be in a higher tax bracket than where I've been 99% of my life, so we'll see how it goes. This is why I am concerned about taxes. With the first paycheck I'll know where I'll stand, and will adjust finances accordingly.

Thanks for the help. What you said has really made me re-think my strategy.

krow36
Posts: 1897
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: New to Investing, I feel lost

Post by krow36 » Sat Sep 22, 2018 1:10 pm

Are you here working in the US with a Green Card? Is citizenship a possibility? Will you return to your home country soon or in retirement? The answers may be important in determining how you should save in the US.

Is your employment with a K-12 public school district? If so, you very likely have a selection of vendors for you 403b plan. And also for a 457 plan. If this is the case, we can help you select a low-cost vendor from the list. Most of the vendors will be high-cost providers of annuities based 403b plans, which you should avoid.

22twain
Posts: 1554
Joined: Thu May 10, 2012 5:42 pm

Re: New to Investing, I feel lost

Post by 22twain » Sat Sep 22, 2018 1:24 pm

LifeIsElectric wrote:
Sat Sep 22, 2018 12:51 pm
No home insurance hehe
You're taking a big risk. Fire, tornadoes, hurricanes (especially if you're in south Texas)...

We were worried about Hurricane Florence, but fortunately we're outside the damage zone. However, we once had a major hailstorm which damaged our roof, and more recently a leaking dishwasher made us replace the floor in two rooms. Our insurance paid for both. :beer
My investing princiPLEs do not include absolutely preserving princiPAL.

dknightd
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Joined: Wed Mar 07, 2018 11:57 am

Re: New to Investing, I feel lost

Post by dknightd » Sat Sep 22, 2018 1:34 pm

LifeIsElectric wrote:
Sat Sep 22, 2018 12:51 pm


No home insurance hehe

You might want to reconsider that. I don't know where the money came from you to buy your house, But having no insurance is risky. I guess it is up to you.

dknightd
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Joined: Wed Mar 07, 2018 11:57 am

Re: New to Investing, I feel lost

Post by dknightd » Sat Sep 22, 2018 1:35 pm

please delete this
Apparently I can not "You cannot delete posts in this forum." thannks

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StormShadow
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Re: New to Investing, I feel lost

Post by StormShadow » Sat Sep 22, 2018 1:39 pm

LifeIsElectric wrote:
Sat Sep 22, 2018 10:54 am
I will be making ~$45K/year...I can live a year with $7K, set funds aside for an emergency, and invest a good percentage of what's left.
Find your asset allocation (percent stocks vs bonds); I recommend 90/10, 85/15 or 80/20 using nothing but low cost index funds.

Max out your 401k according to your asset allocation.
Max out your Roth IRA according to your asset allocation.
Invest the rest in a taxable fund according to your asset allocation.

Be tax efficient with your investments.

Set it and forget it. Ignore the noise.

Be healthy. Find a hobby.

Welcome to Bogleheads.

Starfish
Posts: 375
Joined: Wed Aug 15, 2018 6:33 pm

Re: New to Investing, I feel lost

Post by Starfish » Sat Sep 22, 2018 2:17 pm

It's very funny that people find amazing that you can live on 7k$/year. Maybe this is why so many Americans are so sunk in debt. Probably the idea that it should be any correlation between PRESENT income and expenses is what damages them.


As a grad student in my late 20s I lived in NY me and most of my colleagues and friends lived on similar amounts.
I had a good life and I traveled international a month a year. I also traveled a lot within US (it's true, sometimes not on my dime).
My expenses were as follows:
- rent ~360$ (6 people in one 3 bedroom apt.)
- food 200$ (it's plenty for one person, I know it's possible with half)
- misc 200$

After a while I had a car
- Car insurance was a big one, 1000$ a year, but I was sharing a car with a friend.

I was travelling winter and summer home (eastern europe) on my money (it was much cheaper to fly, 4-700$) and I was having a blast spending 500$ for an entire month of fun.

OP:
1. Save 10k as an emergency fund
2. Open a vanguard account and set up an automatic investment

I am not sure about the 403b thing, you tax rate is low and you cannot access the money. Try a Roth IRA for first 5.5k.
Last edited by Starfish on Sat Sep 22, 2018 3:11 pm, edited 2 times in total.

Momus
Posts: 538
Joined: Tue Feb 21, 2012 9:23 pm

Re: New to Investing, I feel lost

Post by Momus » Sat Sep 22, 2018 2:25 pm

EdLaFave wrote:
Sat Sep 22, 2018 11:45 am
I'd like to know how you survive on so little. I'm a bit of a minimalist, but that doesn't seem possible when rent for a 1 bedroom in my city is 13k.

If you're still in the reading phase you may want to check on this Investing 101 page. It covers the fundamentals nicely.

If you have a 403b, list the fund choices. Also, many folks who have a 403b also have access to a 457b, do you? If so list those fund choices.

It sounds like you should familiarize yourself with the various types of accounts:

401k = Plan offered through employer, $18,500 max contribution per year.
403b = Same
457b = Same
IRA = Plan you open, fund, and maintain on your own, $5,500 max contribution per year pending income restrictions.
HSA = Plan you can treat like an IRA if you have a qualified high deductible health plan, $3,450 max contribution per year.
Taxable = Plan you open, fund, and maintain on your own...unlimited contributions but doesn't receive favorable tax treatment as the plans listed above do.

...there are some other types of accounts, but those are the major ones.

The accounts that receive favorable tax treatment (401k, 403b, 457b, etc) often come in either Traditional or Roth. You should familiarize yourself with the difference between the two. I believe most people will pay less tax if they use a Traditional. My reasoning for that opinion was laid out nicely in this blog post.

Based on what you've said, put $18,500 in the 403b, $5,500 in an IRA, and put the rest in a taxable account.

Create a 3 fund portfolio or invest in an all-in-one fund (like Vanguard's TargetDate or LifeStrategy funds) that essentially creates the 3 fund portfolio for you.

Remember to think of your portfolio as the summation of all accounts. In other words, each account doesn't have to be a stand alone portfolio...if it is cheaper to own domestic stock in a 403b and it is cheaper to own bonds and international stock in your IRA then do that as long as you're meeting your overall asset allocation.
Housing is expensive, but in some cities housing is dirt cheap. I remember I rent a studio in a BFE for $350/mo 5 yrs ago.

All my other expenses, food, all monthly utilities, phone, internet cable, and car insurance total around $450/mo. It's doable if you have paid off house/cheap rent. I literally can make $10/h flipping burger and still save 700-800/mo.

Momus
Posts: 538
Joined: Tue Feb 21, 2012 9:23 pm

Re: New to Investing, I feel lost

Post by Momus » Sat Sep 22, 2018 2:31 pm

Marjimmy wrote:
Sat Sep 22, 2018 12:21 pm
$200 a month on food?

How....

Thats $6.66 a day.... or a little over $2 a meal?
I can do with 150/mo. Dark meat and Chicken breast on sale $0.88-1.71/lb, rice, potato, pasta and tons of frozen veggies are cheap. I don't know why people are so shocked with a food budget of $100-200/mo.

Okie77
Posts: 77
Joined: Mon Aug 20, 2018 10:11 pm

Re: New to Investing, I feel lost

Post by Okie77 » Sat Sep 22, 2018 2:33 pm

Keep it simple.

Max out company retirement plan in the lowest available expense ratio. 85-90 stocks 10/15 bonds.

Max out Roth IRA or Traditional IRA in Vanguard target fund 2060

Set and forget. Don't make changes when the market crashes.

Marjimmy
Posts: 150
Joined: Tue Nov 13, 2012 11:14 pm

Re: New to Investing, I feel lost

Post by Marjimmy » Sat Sep 22, 2018 2:36 pm

Momus wrote:
Sat Sep 22, 2018 2:31 pm
Marjimmy wrote:
Sat Sep 22, 2018 12:21 pm
$200 a month on food?

How....

Thats $6.66 a day.... or a little over $2 a meal?
I can do with 150/mo. Dark meat and Chicken breast on sale $0.88-1.71/lb, rice, potato, pasta and tons of frozen veggies are cheap. I don't know why people are so shocked with a food budget of $100-200/mo.
That's wild to me. Without getting to personal how much do you weigh? I'm 185 solid muscle, lift 4-5 times a week and spend $250 out and $250 on groceries a month. I also buy organic.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

LifeIsElectric
Posts: 9
Joined: Thu Sep 20, 2018 10:53 am

Re: New to Investing, I feel lost

Post by LifeIsElectric » Sat Sep 22, 2018 2:41 pm

krow36 wrote:
Sat Sep 22, 2018 1:10 pm
Is your employment with a K-12 public school district? If so, you very likely have a selection of vendors for you 403b plan. And also for a 457 plan. If this is the case, we can help you select a low-cost vendor from the list. Most of the vendors will be high-cost providers of annuities based 403b plans, which you should avoid.
I work with a university system, and the list of vendors includes:
  • Fidelity Investments
    Voya Financial
    Lincoln Financial Group
    TIAA
    VALIC
I am thinking about using Fidelity
Last edited by LifeIsElectric on Sat Sep 22, 2018 2:44 pm, edited 1 time in total.

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fortyofforty
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Re: New to Investing, I feel lost

Post by fortyofforty » Sat Sep 22, 2018 2:44 pm

I agree with those who suggested maxing out your 403(b). If you have access to a Roth 403(b), I'd choose that over traditional 403(b). Here's a decent summary of their attributes, by The Motley Fool. After that, you will be dollar-cost averaging into investments, which is not bad. You can invest in almost any Vanguard fund for just $3,000. You can open a Vanguard Money Market fund, as a start, just as a place to park money while you figure out what to do. The key is to begin saving, and after building up enough to cover expenses in a financial downturn, begin investing.

I really like the LifeStrategy funds for new investors, or those seeking the ultimate in simplicity. They include a mixture of stocks and bonds, so you only have to put your money into one place, and Vanguard allocates it among four indexes. You can go online and order prospectuses, or call, and have them mailed to you. Read up. Focus on their investment strategies. Do not get seduced by flashy or trendy funds at this stage of your investing "career". Steady, solid, forever funds are your friends.

For books, something like Jack Bogle's on Common Sense on Mutual Funds or Little Book of Common Sense Investing will change your life. You can find them at your library, or used bookstore, if you want to save more money. In reading them you will understand the devotion many of us here feel to Jack. He's undoubtedly saved investors billions of dollars.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | There are many roads to doublin'. | Original Vanguard Diehard

krow36
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Location: WA

Re: New to Investing, I feel lost

Post by krow36 » Sat Sep 22, 2018 2:46 pm

Fidelity has excellent low-cost index funds and is the best vendor on your list in my opinion.

Starfish
Posts: 375
Joined: Wed Aug 15, 2018 6:33 pm

Re: New to Investing, I feel lost

Post by Starfish » Sat Sep 22, 2018 3:19 pm

Marjimmy wrote:
Sat Sep 22, 2018 2:36 pm
Momus wrote:
Sat Sep 22, 2018 2:31 pm
Marjimmy wrote:
Sat Sep 22, 2018 12:21 pm
$200 a month on food?

How....

Thats $6.66 a day.... or a little over $2 a meal?
I can do with 150/mo. Dark meat and Chicken breast on sale $0.88-1.71/lb, rice, potato, pasta and tons of frozen veggies are cheap. I don't know why people are so shocked with a food budget of $100-200/mo.
That's wild to me. Without getting to personal how much do you weigh? I'm 185 solid muscle, lift 4-5 times a week and spend $250 out and $250 on groceries a month. I also buy organic.
That is because you eat out and don't cook much. Cooked food is cheap and a lot healthier if you manage to reduce meat intake.
Plus the organic thing.

If you buy just meat (mostly pork and chicken) and raw vegetables and beans and nothing frozen, food is very cheap.
Weight does not have anything to do here, we assume regular quantity of food.
I can assure you that there are many many people eating VERY well and healthy at 200$/month in cheaper states (it's much harder in California).

EdLaFave
Posts: 334
Joined: Fri Dec 26, 2014 2:31 am

Re: New to Investing, I feel lost

Post by EdLaFave » Sat Sep 22, 2018 3:44 pm

LifeIsElectric wrote:
Sat Sep 22, 2018 2:41 pm
I work with a university system, and the list of vendors includes:
  • Fidelity Investments
    Voya Financial
    Lincoln Financial Group
    TIAA
    VALIC
I am thinking about using Fidelity
Fidelity is great. I documented their plan here.

But the question still remains, do you also have access to a 457b? If so then I’d prioritize that over a taxable account.

In this scenario you’d have $42,500 of tax advantaged space and given your extremely low spending, you probably shouldn’t be paying a cent in federal tax. Not sure about your state tax.

Austintatious
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Re: New to Investing, I feel lost

Post by Austintatious » Sat Sep 22, 2018 4:00 pm

Lots of good advice here, OP. Take the time to study, maybe starting with this article written by Bill Bernstein called "If You Can" It's written especially for young folks new to investing. It's relatively easy to understand, provides a lot of education about investing, and offers you very smart investment suggestions. Read it several times and then read it again from time to time. The repetition will help you learn the basic lessons in the article.

https://www.etf.com/docs/IfYouCan.pdf

Also, Mr. Larimore asked you (above) to list specific information regarding the funds available in your workplace savings plan. You mention a 403(b) plan being available. You'll get much better input from the forum if you provide info regarding the funds in the plan - fund name, ticker symbol (all those letters), the expense ratios.

Also, you mention starting your own 401(k) account. That's really another kind of workplace program and not the kind of personal savings program you can start on your own. But you can start your own traditional (tax deferred) or Roth IRA independently from work. You could, for example, save up $1000 and start an account at Vanguard if you use one of their target date funds. They're excellent funds for both beginners and lifelong savers. Note that Dr. Bernstein suggests doing something just like that in that article I've cited above. And note that, at least for this year, you're limited to putting no more than $5,500 a year in your own IRA. And you could be putting money in your 403(b), all that, as you continue your learning about investing.

Come back with more info about your workplace account(s) and the funds available.

loslebenrl483
Posts: 22
Joined: Sun Sep 02, 2018 12:23 pm

Re: New to Investing, I feel lost

Post by loslebenrl483 » Sat Sep 22, 2018 4:15 pm

I've found these helpful. I think they do a good job of setting you up on the right path.

Personal Finance in Your 20s and 30s For Dummies https://www.amazon.com/dp/1119431417/re ... OBb1RB4YPZ

The Bogleheads' Guide to Investing https://www.amazon.com/dp/1118921283/re ... OBbY3JDVPV

The Bogleheads' Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk https://www.amazon.com/dp/1119487331/re ... OBbH4TBT70

pkcrafter
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Location: CA
Contact:

Re: New to Investing, I feel lost

Post by pkcrafter » Sat Sep 22, 2018 6:27 pm

Health insurance? Car insurance?

Also, I am seeing someone, and she likes to cook things for me, so my food money stretches even further.
Uh-huh. Well, things may change around your place some day. :wink:

Anyway, getting back to investing, we need to see a list of funds available from Fidelity including names and expense ratios.

You can also open an IRA or Roth IRA at Fidelity as well. You can do the 3-fund portfolio (link above from Taylor Larimore) using Fidelity funds. In the end, investing actually is not hard, but you have to be aware of emotional pull and getting your asset allocation correct.

Asset Allocation from the Wiki

https://www.bogleheads.org/wiki/Asset_allocation
This is where I have an issue. I read the beginner's guide, and have been reading some books that are recommended in this site. It all is great, but I think I've reached a plateau. I don't know where to move, or what to do next. Every time I look at the calendar I feel that I am behind on everything, and my heart wants to rush into investing, but in my spirit I know I need to calm down and set up a strategy and analyze the field.
You are not behind, you are starting very early. DO NOT RUSH into anything. You first need a plan! And don't try analyzing the field. A total stock market index fund tracks the market (the whole field) and that's what we recommend. Getting into investing isn't hard; keeping from messing with it can be hard. Buy it, hold it.

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

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.

pennylane
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Re: New to Investing, I feel lost

Post by pennylane » Sat Sep 22, 2018 7:08 pm

Seriously what’s everyone going crazy over?

My wife and I have a $400 food budget. We can usually keep it at $320 per month. We eat well too.

pennylane
Posts: 141
Joined: Thu Apr 12, 2018 10:22 am

Re: New to Investing, I feel lost

Post by pennylane » Sat Sep 22, 2018 7:08 pm

Seriously what’s everyone going crazy over?

My wife and I have a $400 food budget. We can usually keep it at $320 per month. We eat well too.

Mr. Jelly
Posts: 24
Joined: Fri Sep 21, 2018 5:12 pm

Re: New to Investing, I feel lost

Post by Mr. Jelly » Sat Sep 22, 2018 7:23 pm

I'd go into a Vanguard target date fund that matches your age. Keep throwing money in it for the next thirty years and you'll be good. 8-)

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fortyofforty
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Re: New to Investing, I feel lost

Post by fortyofforty » Sun Sep 23, 2018 7:08 am

Don't forget that, as young as you are, you have never experienced a bear market. You will open your statements and see the value of your portfolio shrink, over and over. You'll ask yourself what are you doing with your money. You'll realize you'd have made better returns in a CD or bank account. It will take some intestinal fortitude to realize that, when starting out, you aren't losing that much money compared to what you'll have in several decades, but much more importantly, market downturns are buying opportunities. Stocks go on sale. Crashes are also very exhilarating, as you'll see.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | There are many roads to doublin'. | Original Vanguard Diehard

Okie77
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Re: New to Investing, I feel lost

Post by Okie77 » Sun Sep 23, 2018 11:39 am

pennylane wrote:
Sat Sep 22, 2018 7:08 pm
Seriously what’s everyone going crazy over?

My wife and I have a $400 food budget. We can usually keep it at $320 per month. We eat well too.


Family of 4. We do it for under $500 per month and eat like kings. It's not difficult.

Marjimmy
Posts: 150
Joined: Tue Nov 13, 2012 11:14 pm

Re: New to Investing, I feel lost

Post by Marjimmy » Mon Sep 24, 2018 8:18 am

Okie77 wrote:
Sun Sep 23, 2018 11:39 am
pennylane wrote:
Sat Sep 22, 2018 7:08 pm
Seriously what’s everyone going crazy over?

My wife and I have a $400 food budget. We can usually keep it at $320 per month. We eat well too.


Family of 4. We do it for under $500 per month and eat like kings. It's not difficult.
If you wouldn't mind.... Walk me through a days worth of meals for the family. I'm so curious how you can manage to get away with that as I spend over$500 on just myself.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

BogleMelon
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Re: New to Investing, I feel lost

Post by BogleMelon » Mon Sep 24, 2018 8:32 am

LifeIsElectric wrote:
Sat Sep 22, 2018 11:26 am
HEDGEFUNDIE wrote:
Sat Sep 22, 2018 11:13 am
How are you able to live on $600/month? How much do you pay for rent?
I have my own house. It's not a mansion, but it has everything I need.
In a month I spend about ~$200 on utilities, $70 gas, $200 food
Cars don't only need gas. They need maintenance and repairs. They also depreciate, meaning you would need a car every x number of years depending on usage and car condition.
They need insurance too! How could you not mention that? Insurance deductible is as well an expense that you should be ready for..
You need clothes. Eventually your socks will tear up! That should be included..
You may need a visit to a doctor, even though you may think you are young and healthy, you still should be prepared for such visits and emergencies.
Dentist is another thing as well.
Any annual membership fees you skipped?
What do you do (how much you pay) to entertain yourself? (cable, netflix,etc)? You should include that
Since you own your home, you should include the maintenance. You should set aside some money for that.

All these money should be available to you in a saving account or alike, and better not to be invested in a risky way.

Good luck
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

Okie77
Posts: 77
Joined: Mon Aug 20, 2018 10:11 pm

Re: New to Investing, I feel lost

Post by Okie77 » Mon Sep 24, 2018 10:37 am

Marjimmy wrote:
Mon Sep 24, 2018 8:18 am
Okie77 wrote:
Sun Sep 23, 2018 11:39 am
pennylane wrote:
Sat Sep 22, 2018 7:08 pm
Seriously what’s everyone going crazy over?

My wife and I have a $400 food budget. We can usually keep it at $320 per month. We eat well too.


Family of 4. We do it for under $500 per month and eat like kings. It's not difficult.
If you wouldn't mind.... Walk me through a days worth of meals for the family. I'm so curious how you can manage to get away with that as I spend over$500 on just myself.
We don't eat out and the wife is a great cook. She does all of the grocery shopping mainly at Sprouts Farmers Market and buys what's on sale.It is crazy how much you can spend eating out. We used to a lot. With that said, if I was single and not married, I'm sure I would be spending more $$$ on food or I would probably starve since I don't cook. 😀

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