Should I be more aggressive?

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Topic Author
Boilermaker10
Posts: 18
Joined: Fri Mar 22, 2019 8:53 pm

Should I be more aggressive?

Post by Boilermaker10 » Fri Mar 22, 2019 9:12 pm

Main question is, I feel like I have a lot saved in cash that I can’t bring myself to put into the market. Thought I would ask the boards opinion on what to do.

Story: 2 years out of college, 24 year old currently making around 90k, wife will graduate from Physician Assistant school soon and expects to make 100k starting. Lucky enough to have no debt but currently renting, looking to buy when something nice comes available.

Savings:
Checking account/emergency fund 1% interest: 38K
Vanguard prime mm: 88K

Taxable:
Fidelity: 28K in various stocks
DODGX: 6K .52 ER
(Both accounts opened 8+ years ago before I found Bogleheads)

Retirement:
401k: 11K in SP 500 index fund .11 ER
My Roth: 26K half VFIAX half vanguard healthcare
Her Roth: 16K in VFIAX

Contribute to 401k up to match amount of 6% and have been maxing Roth’s for several years, this will be the last year for Roth’s since income will be significantly higher next year with wife working. Will then max Trad Ira instead.

I seem to have no problem putting money into the market with retirement accounts, but I hesitate to put anymore after that and have just been accumulating it in my savings. Should I be more aggressive? I know market timing is impossible but I keep thinking we are 10 years into this bull run in a trade war.

What would other bogleheads do?
Last edited by Boilermaker10 on Sat Mar 23, 2019 8:10 pm, edited 1 time in total.

HEDGEFUNDIE
Posts: 3666
Joined: Sun Oct 22, 2017 2:06 pm

Re: Should I be more aggressive?

Post by HEDGEFUNDIE » Fri Mar 22, 2019 10:11 pm

Boilermaker10 wrote:
Fri Mar 22, 2019 9:12 pm
I seem to have no problem putting money into the market with retirement accounts
Then you should be maxing your 401k, instead of just up to the match.

$19k/yr for each of you.

radiowave
Posts: 2272
Joined: Thu Apr 30, 2015 5:01 pm

Re: Should I be more aggressive?

Post by radiowave » Fri Mar 22, 2019 10:15 pm

For your taxable account, now it the time to sell existing funds and take a little hit on capital gains, but long term effect would be lower expense ratios and simplicity. Consider a Total Stock fund like the Vanguard VTSAX in taxable. Also, Total international goes well in taxable account.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

delamer
Posts: 9344
Joined: Tue Feb 08, 2011 6:13 pm

Re: Should I be more aggressive?

Post by delamer » Fri Mar 22, 2019 11:17 pm

You’re 24. You shouldn’t care what happens to the stock market in the short run — bull, bear, or otherwise — for assets that you are saving for retirement. Determine your long-term asset allocation, and deploy your money accordingly.

However, for money you expect to spend within the next 5 years, keep it in cash or very short term bonds.

123
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Joined: Fri Oct 12, 2012 3:55 pm

Re: Should I be more aggressive?

Post by 123 » Fri Mar 22, 2019 11:28 pm

If you spouse is graduating soon and you expect to be buying a home I see nothing wrong with your current large cash position since first home purchases usually involve a lot of incidental expenses, furniture, etc. You may not be "ready" for the taxable account market if you've got lots of other issues on your financial plate.
The closest helping hand is at the end of your own arm.

3funder
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Joined: Sun Oct 15, 2017 9:35 pm

Re: Should I be more aggressive?

Post by 3funder » Sat Mar 23, 2019 1:14 am

123 wrote:
Fri Mar 22, 2019 11:28 pm
If you spouse is graduating soon and you expect to be buying a home I see nothing wrong with your current large cash position since first home purchases usually involve a lot of incidental expenses, furniture, etc. You may not be "ready" for the taxable account market if you've got lots of other issues on your financial plate.
+1

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ruralavalon
Posts: 16734
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Should I be more aggressive?

Post by ruralavalon » Sat Mar 23, 2019 12:46 pm

Welcome to the forum :) .

It looks like you are doing great for just 2 years out of college.

Short answer: Yes, you should be more aggressive.

. . . . .

Some additional information will be helpful.

Is the "1% interest bank account: 38K" an emergency fund? Will it cover around 3-6 months worth of basic living expenses?

About how much (in dollars) do you contribute annually to each account, other than your emergency?

Please list the funds offered in your 401k. Please give fund names, tickers and expense ratios.

In your taxable account is the fund you are using Dodge & Cox Stock Fund (DODGX) ER 0.52%?

You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

Boilermaker10 wrote:
Fri Mar 22, 2019 9:12 pm
Main question is, I feel like I have a lot saved in cash that I can’t bring myself to put into the market. Thought I would ask the boards opinion on what to do.

Story: 2 years out of college, 24 year old currently making around 90k, wife will graduate from Physician Assistant school soon and expects to make 100k starting. Lucky enough to have no debt but currently renting, looking to buy when something nice comes available.

Savings:
1% interest bank account: 38K
Vanguard prime mm: 88K

Taxable:
Fidelity: 28K in various stocks
Dodge and cox fund: 6K
(Both accounts opened 8+ years ago before I found Bogleheads)

Retirement:
401k: 11K in SP 500 index fund
My Roth: 26K half VFIAX half vanguard healthcare
Her Roth: 16K in VFIAX

Contribute to 401k up to match amount of 6% and have been maxing Roth’s for several years, this will be the last year for Roth’s since income will be significantly higher next year with wife working. Will then max Trad Ira instead.

I seem to have no problem putting money into the market with retirement accounts, but I hesitate to put anymore after that and have just been accumulating it in my savings. Should I be more aggressive? I know market timing is impossible but I keep thinking we are 10 years into this bull run in a trade war.

What would other bogleheads do?
I would switch the "1% interest bank account: 38K" to a federally insured bank account with a better return. For rates,see www.bankrate.com.


Asset allocation.
If that "1% interest bank account: 38K" is your emergency fund, then it looks like your investment portfolio is -- $88k fixed income and $87k equities. An asset allocation of 50/50 equities/fixed income is extremely conservative for a 24 year old two years out of college.

At age 24 I suggest around 20% in bonds (or other fixed income like CDs). Wiki article "Asset allocation". Wiki article Bogleheads Investment Philosophy, "Never bear too much or too little risk".


Account funding priority.
You should probably increase your contributions to your 401k, don't limit yourself to just enough to get the employer match. It looks like you may have good funds offered in your 401k, so there is no apparent reason to not contribute more.

You should probably not be contributing to a taxable account for investing.

Wiki article "Prioritizing Investments".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

retiredjg
Posts: 38477
Joined: Thu Jan 10, 2008 12:56 pm

Re: Should I be more aggressive?

Post by retiredjg » Sat Mar 23, 2019 3:09 pm

If you have a house in mind, you should have a lot of money in savings.

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Wiggums
Posts: 1961
Joined: Thu Jan 31, 2019 8:02 am

Re: Should I be more aggressive?

Post by Wiggums » Sat Mar 23, 2019 3:16 pm

retiredjg wrote:
Sat Mar 23, 2019 3:09 pm
If you have a house in mind, you should have a lot of money in savings.
+1

I’d also max out the 401k as your next priority.

ninjab
Posts: 45
Joined: Fri Sep 07, 2018 10:41 pm

Re: Should I be more aggressive?

Post by ninjab » Sat Mar 23, 2019 3:25 pm

retiredjg wrote:
Sat Mar 23, 2019 3:09 pm
If you have a house in mind, you should have a lot of money in savings.
plan for 20% down payment for the mortgage, if you put down less you will need to waste money on PMI (private mortgage insurance, which insures the lender against you defaulting). So if you plan on a $500,000 home you are about right with your cash on hand, but if your home is going to be $200,000, you should invest the excess in your taxable (and max your 401k).

Also if you start contributing to a tIRA without a tax deduction, you want to use the Backdoor Roth Conversion.

MotoTrojan
Posts: 6915
Joined: Wed Feb 01, 2017 8:39 pm

Re: Should I be more aggressive?

Post by MotoTrojan » Sat Mar 23, 2019 4:36 pm

HEDGEFUNDIE wrote:
Fri Mar 22, 2019 10:11 pm
Boilermaker10 wrote:
Fri Mar 22, 2019 9:12 pm
I seem to have no problem putting money into the market with retirement accounts
Then you should be maxing your 401k, instead of just up to the match.

$19k/yr for each of you.
This. Plus a Roth ($6K ea). If you can’t muster up the courage to invest in taxable beyond that, that’s okay. Maybe sell the single stocks now too and start fresh.

mortfree
Posts: 1858
Joined: Mon Sep 12, 2016 7:06 pm

Re: Should I be more aggressive?

Post by mortfree » Sat Mar 23, 2019 4:47 pm

+ whatever we’re at in keeping cash savings for that first house purchase.

You will need 20% plus closing costs plus moving costs plus home repairs/upgrades plus house stuff (furniture, lawn equipment, snow equipment perhaps).

You made a comment about not being eligible for the Roth when your wife starts working.

If your income is 190k, minus your 401k contributions (and wife’s too if she has one) could get you below the income requirements to be eligible.

If you can, max your 401k and Roth.

Also, google If You Can for a quick read. Free pdf by Bernstein.

Good luck

retire2022
Posts: 954
Joined: Tue Oct 02, 2018 6:10 pm
Location: NYC

Re: Should I be more aggressive?

Post by retire2022 » Sat Mar 23, 2019 9:26 pm

Boilermaker10

Hello

24 years old subtracts 67 years old ( 67 is full retirement age FRA)=42 years of investing

assuming you will contribute to 42 years of investing it will be 42X $19,000 (401K)= $798,000.00 of contributions

At 4% compounded for 42 years it is projected to be $2,071,235.25

compound interest calculator:

http://www.moneychimp.com/calculator/co ... ulator.htm

Most BH follow this:

https://www.bogleheads.org/wiki/Lazy_portfolios

good luck

Bacchus01
Posts: 3182
Joined: Mon Dec 24, 2012 9:35 pm

Re: Should I be more aggressive?

Post by Bacchus01 » Sat Mar 23, 2019 10:29 pm

Others have already said a lot.

Max your 401ks.
Backdoor ROTH if you can’t do conventional
Fund an HSA is you have one and pay medical out of pocket. Young people often have very low medical expenses and funding an HSA is a huge benefit.

Don’t buy a house. At 24, whatever you buy won’t be what you want in 10 years. Buy a duplex and rent out one side. If I could do it over again, I would not have bought our house when I was 24 (I was 24!), I would have bought a duplex.

Topic Author
Boilermaker10
Posts: 18
Joined: Fri Mar 22, 2019 8:53 pm

Re: Should I be more aggressive?

Post by Boilermaker10 » Sun Mar 24, 2019 9:19 am

Will look into HSA, did not know much about them but they look like a very good tool. Both my wife and I are still on parents insurance till 26, we both have younger siblings and leaving us on doesn’t cost them anything.

As far as a house, we live in a very rural area and are in no hurry to buy. There are not very many nice houses, and the ones that are do not come for sale. Figure if we cannot find something that fits our criteria in 5 years, we will go ahead and build.

retiredjg
Posts: 38477
Joined: Thu Jan 10, 2008 12:56 pm

Re: Should I be more aggressive?

Post by retiredjg » Sun Mar 24, 2019 9:24 am

If your goal is 5 years, you need to keep the money in savings. And if the right house just happens to come on the market in the meantime, you can jump on it if you have the downpayment.

ETadvisor
Posts: 314
Joined: Tue Jul 04, 2017 1:37 pm

Re: Should I be more aggressive?

Post by ETadvisor » Sun Mar 24, 2019 10:40 am

Boilermaker10 wrote:
Fri Mar 22, 2019 9:12 pm
Main question is, I feel like I have a lot saved in cash that I can’t bring myself to put into the market. Thought I would ask the boards opinion on what to do.

Story: 2 years out of college, 24 year old currently making around 90k, wife will graduate from Physician Assistant school soon and expects to make 100k starting. Lucky enough to have no debt but currently renting, looking to buy when something nice comes available.

Savings:
Checking account/emergency fund 1% interest: 38K
Vanguard prime mm: 88K

Taxable:
Fidelity: 28K in various stocks
DODGX: 6K .52 ER
(Both accounts opened 8+ years ago before I found Bogleheads)

Retirement:
401k: 11K in SP 500 index fund .11 ER
My Roth: 26K half VFIAX half vanguard healthcare
Her Roth: 16K in VFIAX

Contribute to 401k up to match amount of 6% and have been maxing Roth’s for several years, this will be the last year for Roth’s since income will be significantly higher next year with wife working. Will then max Trad Ira instead.

I seem to have no problem putting money into the market with retirement accounts, but I hesitate to put anymore after that and have just been accumulating it in my savings. Should I be more aggressive? I know market timing is impossible but I keep thinking we are 10 years into this bull run in a trade war.

What would other bogleheads do?
Live on your wife's 100k salary and save yours! It's really that simple :sharebeer

DesertDiva
Posts: 638
Joined: Thu Mar 01, 2018 12:49 pm
Location: In the desert

Re: Should I be more aggressive?

Post by DesertDiva » Sun Mar 24, 2019 2:30 pm

Boilermaker10 wrote:
Fri Mar 22, 2019 9:12 pm
Main question is, I feel like I have a lot saved in cash that I can’t bring myself to put into the market. Thought I would ask the boards opinion on what to do.

Story: 2 years out of college, 24 year old currently making around 90k, wife will graduate from Physician Assistant school soon and expects to make 100k starting. Lucky enough to have no debt but currently renting, looking to buy when something nice comes available.

Savings:
Checking account/emergency fund 1% interest: 38K
Vanguard prime mm: 88K

Taxable:
Fidelity: 28K in various stocks
DODGX: 6K .52 ER
(Both accounts opened 8+ years ago before I found Bogleheads)

Retirement:
401k: 11K in SP 500 index fund .11 ER
My Roth: 26K half VFIAX half vanguard healthcare
Her Roth: 16K in VFIAX

Contribute to 401k up to match amount of 6% and have been maxing Roth’s for several years, this will be the last year for Roth’s since income will be significantly higher next year with wife working. Will then max Trad Ira instead.

I seem to have no problem putting money into the market with retirement accounts, but I hesitate to put anymore after that and have just been accumulating it in my savings. Should I be more aggressive? I know market timing is impossible but I keep thinking we are 10 years into this bull run in a trade war.

What would other bogleheads do?
Read through the wiki pages in this site and also start with the recommended reading list. Asset allocation is very important at this stage. Also you need this education to resist the urge to time the market.

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