New to investing, looking for advice

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avelasco52
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Location: CA

New to investing, looking for advice

Post by avelasco52 »

Hello,

I am new and learning about investing and finance in general over the last couple months, and am a bit overwhelmed. Recently was introduced to finance and investment podcasts/blogs, and am looking to get started in the best way. I have heard numerous good things about Vanguard as opposed to other investment companies, but having trouble finding someone to talk to about it. Here is my current situation. If you have any input, I'd be more than happy to hear it.

Graduated 2 years ago, Married, no kids. Age 29
I have 2 jobs/incomes which average about 90-95K per year, wife's income about 80K (pre-tax)
115K student loan debt at 4.45% interest. Wife has 155K student loan debt, 5.5-6.5% interest
Typically <5K in multiple checking/savings accounts
minimal living expense: $500/month rent total
Spouse currently has 401K through employer with 3% company match
Federal Tax rate: 24%
State Tax rate: 9.3%

401K through my current job, 6% contribution, no company match (1.1K current value). Vanguard Target Retirement 2055 Fund - Investor Class (VFFVX) (.15)

Maxing out contributions to Roth IRA (10K right now) held in EdwardJones (friend is an advisor, and I wasn't sure how to invest when I started with them :oops: )
-11.3% Mutual Funds:
PGIM TOTAL RETURN BOND CL R6 (PTRQX), T ROWE PRICE U.S. TREASURY MONEY CL I (TRGXX)
-88.3% ETFs/CEFs: ISHARES CORE DIVIDEND GROWTH EXCHANGE TRADED FUND (DGRO), VANGUARD INTERNATIONAL EQUITY FTSE ALL WORLD EX USA ETF (VEU), SCHWAB US SMALL-CAP ETF (SCHA), SCHWAB US AGGREGATE BOND EXCHANGE TRADED FUND (SCHZ), SCHWAB STRATEGIC TR US MID CAP ETF (SCHM), ISHARES CORE S&P TOTAL U S STK MKT ETF (ITOT)

Emergency fund of 7.5K in EdwardJones:
-MNY MKT FUND INVESTMENT SHARES

Savings for a house (one day) in EdwardJones 10K, $500/month contribution:
-90.6% mutual funds:
BLACKROCK EQUITY DIVIDEND CL K (MKDVX), BLACKROCK HIGH YIELD MUNICIPAL CL K (MKYHX), BLACKROCK NATIONAL MUNICIPAL CL K (BNMLX), BLACKROCK TOTAL RETURN CL K (MPHQX), FEDERATED GOVERNMENT OBLIGATIONS CL PRM (GOFXX), FRANKLIN DYNATECH CL R6 (FDTRX), VICTORY SYCAMORE ESTABLISHED VALUE CL R6 (VEVRX)
-9.3% ETF & CEF:
ISHARES CORE DIVIDEND GROWTH EXCHANGE TRADED FUND (DGRO)
-.2% cash

*I couldn't find on EJ website the ER for each fund unfortunately.

My primary goal is repay debt, so I'm not sure if investment would be a good choice for me right now anyways. Also, I know that I currently have some accounts that are not situated in the best strategy, and would like to make changes. I am open to any suggestions :happy Thank you!
Last edited by avelasco52 on Fri Jan 24, 2020 2:59 am, edited 2 times in total.
Flyer24
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Re: New to investing, looking for advice

Post by Flyer24 »

For the best portfolio advice, use the edit tool and follow the format in this link.

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RootSki
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Re: New to investing, looking for advice

Post by RootSki »

Get away from EJ as fast as possible. Those high fees and obscenely complex portfolios are absurd.

S&P500 and Total Market index funds are the way to go.
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Sandtrap
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Re: New to investing, looking for advice

Post by Sandtrap »

1. Pay off debt.
2. Leave Edward Jones.
3. Read.
GETTING STARTED
https://www.bogleheads.org/wiki/Getting_started

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know
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Wiggums
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Re: New to investing, looking for advice

Post by Wiggums »

RootSki wrote: Thu Jan 23, 2020 7:35 am Get away from EJ as fast as possible. Those high fees and obscenely complex portfolios are absurd.

S&P500 and Total Market index funds are the way to go.
+1

I have the three fund portfolio.

Low fees and time in the market are your best friend.
retired@50
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Re: New to investing, looking for advice

Post by retired@50 »

Every dollar you hand over to Ed Jones is a dollar that should have gone someplace else. Where should you send the money...???
Steps to take.
0. Move ALL accounts away from EJ to Vanguard or Fidelity. No advisor, no high fees. Use stock and bond index funds to suit your goals.
1. Emergency fund in an easily accessible money market account. Linked to your personal checking with electronic transfers.
2. Pay off your student debt. A guaranteed return of your 4.45% interest rate.
3. Save for a house, invest for retirement, etc.
4. Report back to Bogleheads as needed with questions, and/or read some books about investing in your spare time. See wiki for suggested reading.

Regards,
This is one person's opinion. Nothing more.
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ruralavalon
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Re: New to investing, looking for advice

Post by ruralavalon »

Welcome to the forum :) .

avelasco52 wrote: Thu Jan 23, 2020 2:43 am Hello,

I am new and learning about investing and finance in general over the last couple months, and am a bit overwhelmed. Recently was introduced to finance and investment podcasts/blogs, and am looking to get started in the best way. I have heard numerous good things about Vanguard as opposed to other investment companies, but having trouble finding someone to talk to about it. Here is my current situation. If you have any input, I'd be more than happy to hear it.

Graduated 2 years ago, Married, no kids. Age 29
I have 2 jobs/incomes which average about 90-95K per year, wife's income about 80K (pre-tax)
115K student loan debt at 4.45% interest
Typically <5K in multiple checking/savings accounts
minimal living expense: $500/month rent total

Contributing to a 401K through my current job, 6% contribution, no company match
Maxing out contributions to Roth IRA (10K right now) held in EdwardJones (friend is an advisor, and I wasn't sure how to invest when I started with them :oops: )
Emergency fund of 7.5K in EdwardJones
Savings for a house (one day) in EdwardJones 10K, $500/month contribution

My primary goal is repay debt, so I'm not sure if investment would be a good choice for me right now anyways. Also, I know that I currently have some accounts that are not situated in the best strategy, and would like to make changes. I am open to any suggestions :happy Thank you!
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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ruralavalon
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Re: New to investing, looking for advice

Post by ruralavalon »

Welcome to the forum :) .

Don't feel too overwhelmed. It's great that you are starting young, using tax-advantaged accounts, and emphasizing paying off your student debt.

avelasco52 wrote: Thu Jan 23, 2020 2:43 am Hello,

I am new and learning about investing and finance in general over the last couple months, and am a bit overwhelmed. Recently was introduced to finance and investment podcasts/blogs, and am looking to get started in the best way. I have heard numerous good things about Vanguard as opposed to other investment companies, but having trouble finding someone to talk to about it. Here is my current situation. If you have any input, I'd be more than happy to hear it.

Graduated 2 years ago, Married, no kids. Age 29
I have 2 jobs/incomes which average about 90-95K per year, wife's income about 80K (pre-tax)
115K student loan debt at 4.45% interest
Typically <5K in multiple checking/savings accounts
minimal living expense: $500/month rent total

Contributing to a 401K through my current job, 6% contribution, no company match
Maxing out contributions to Roth IRA (10K right now) held in EdwardJones (friend is an advisor, and I wasn't sure how to invest when I started with them :oops: )
Emergency fund of 7.5K in EdwardJones
Savings for a house (one day) in EdwardJones 10K, $500/month contribution

My primary goal is repay debt, so I'm not sure if investment would be a good choice for me right now anyways. Also, I know that I currently have some accounts that are not situated in the best strategy, and would like to make changes. I am open to any suggestions :happy Thank you!
I suggest rolling over your IRA from Edward Jones to a low cost provider like Vanguard, Fidelity or Schwab. Low expenses are there key to long-term investing success.

My own personal preference is Vanguard. Just call Vanguard and they will help you with the transfer and do most of the work.

In general I think you are right to concentrate on paying off that "115K student loan debt at 4.45% interest", as a priority ahead of investing.

Wiki article, " Prioritizing Investments ".

. . . . .

What funds are offered in your employer's 401k plan? Also what funds are you currently using? Please give fund names, tickers and expense ratios.

What funds are you currently using in your IRA at Edward Jones? What are you using in your savings account and emergency fund with Edward Jones?

Does your spouse have any accounts or investments?

What is your tax bracket, both federal and state?

Please 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. Please see this for format: " Asking Portfolio Questions".
Last edited by ruralavalon on Thu Jan 23, 2020 1:24 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
lakpr
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Re: New to investing, looking for advice

Post by lakpr »

With a combined income of $170k ($90k, lower-end estimate + $80k from spouse), there should be no reason why you can't maximize your individual 401k plans. If your rent is only $500, and we add even another $1500 per month for other living expenses such as food and clothing, it comes to only $24k per year. Let's say taxes are another 25% on the income (assuming a blended rate of Federal + state taxes on all your income), that's a deduction of $25k. Another generous budget of $30k for health related expenses (premiums, co-pays etc.). You should still have $170k - $25k - $35k - $30k = $80k available for investing.

- Should maximize both your 401k ($39k)
- Should maximize both Roth IRA ($12k)
- Leaves $30k approximately for debt payment per year.

Note that the tax-deferred space, once given up, can never be given back. If there is really a serious cash flow crunch, perhaps cutting down on 401k contributions to just 6% and paying off the debt is a reasonable course of action. I am sorry, I don't see that to be the case for you, especially when you have no children.
3funder
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Re: New to investing, looking for advice

Post by 3funder »

Wiggums wrote: Thu Jan 23, 2020 7:43 am
RootSki wrote: Thu Jan 23, 2020 7:35 am Get away from EJ as fast as possible. Those high fees and obscenely complex portfolios are absurd.

S&P500 and Total Market index funds are the way to go.
+1

I have the three fund portfolio.

Low fees and time in the market are your best friend.
+2
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abuss368
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Re: New to investing, looking for advice

Post by abuss368 »

I would honestly consider reading a few (or many) investment books. You will be thankful for the knowledge gained.

I recommend any of the three Bogleheads Guides books and all books by John C. Bogle.
John C. Bogle: “Simplicity is the master key to financial success."
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abuss368
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Re: New to investing, looking for advice

Post by abuss368 »

One of my favorite books is from John C. Bogle "The Little Book of Common Sense Investing"
Last edited by abuss368 on Wed Apr 29, 2020 3:27 pm, edited 1 time in total.
John C. Bogle: “Simplicity is the master key to financial success."
BirdsE
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Re: New to investing, looking for advice

Post by BirdsE »

Sandtrap wrote: Thu Jan 23, 2020 7:40 am 1. Pay off debt.
2. Leave Edward Jones.
3. Read.
GETTING STARTED
https://www.bogleheads.org/wiki/Getting_started

j :happy follow Sandtrap advice above.
Topic Author
avelasco52
Posts: 11
Joined: Thu Jan 23, 2020 2:14 am
Location: CA

Re: New to investing, looking for advice

Post by avelasco52 »

Thank you all for your feedback. It is much appreciated as someone who is new to this concept, and I will begin the process ASAP.
Topic Author
avelasco52
Posts: 11
Joined: Thu Jan 23, 2020 2:14 am
Location: CA

Re: New to investing, looking for advice

Post by avelasco52 »

ruralavalon wrote: Thu Jan 23, 2020 1:13 pm Welcome to the forum :) .

Don't feel too overwhelmed. It's great that you are starting young, using tax-advantaged accounts, and emphasizing paying off your student debt.

avelasco52 wrote: Thu Jan 23, 2020 2:43 am Hello,

I am new and learning about investing and finance in general over the last couple months, and am a bit overwhelmed. Recently was introduced to finance and investment podcasts/blogs, and am looking to get started in the best way. I have heard numerous good things about Vanguard as opposed to other investment companies, but having trouble finding someone to talk to about it. Here is my current situation. If you have any input, I'd be more than happy to hear it.

Graduated 2 years ago, Married, no kids. Age 29
I have 2 jobs/incomes which average about 90-95K per year, wife's income about 80K (pre-tax)
115K student loan debt at 4.45% interest
Typically <5K in multiple checking/savings accounts
minimal living expense: $500/month rent total

Contributing to a 401K through my current job, 6% contribution, no company match
Maxing out contributions to Roth IRA (10K right now) held in EdwardJones (friend is an advisor, and I wasn't sure how to invest when I started with them :oops: )
Emergency fund of 7.5K in EdwardJones
Savings for a house (one day) in EdwardJones 10K, $500/month contribution

My primary goal is repay debt, so I'm not sure if investment would be a good choice for me right now anyways. Also, I know that I currently have some accounts that are not situated in the best strategy, and would like to make changes. I am open to any suggestions :happy Thank you!
I suggest rolling over your IRA from Edward Jones to a low cost provider like Vanguard, Fidelity or Schwab. Low expenses are there key to long-term investing success.

My own personal preference is Vanguard. Just call Vanguard and they will help you with the transfer and do most of the work.

In general I think you are right to concentrate on paying off that "115K student loan debt at 4.45% interest", as a priority ahead of investing.

Wiki article, " Prioritizing Investments ".

. . . . .

What funds are offered in your employer's 401k plan? Also what funds are you currently using? Please give fund names, tickers and expense ratios.

What funds are you currently using in your IRA at Edward Jones? What are you using in your savings account and emergency fund with Edward Jones?

Does your spouse have any accounts or investments?

What is your tax bracket, both federal and state?

Please 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. Please see this for format: " Asking Portfolio Questions".
Thank you for laying it all out for me. Just recently heard of Bogleheads, and am quite impressed at the speed of all the responses
zeal
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Re: New to investing, looking for advice

Post by zeal »

Welcome to Bogleheads--glad you're here. It is unfortunate that you guys have so much owed in student loans, but, on the bright side, you have a great income. When I was fresh out of college, I owed more than my income in student loans too--I know the feeling you have. Don't worry, you can handle it. Here's what I'd do (in order) in your situation.

1) Move all money from EJ to either Vanguard, Fidelity, or Schwab (reasons echoed from other posters). We have Roth IRAs at Vanguard and Fidelity--very happy with the low-cost index funds and simple UI of their websites (Fidelity a bit simpler in my eyes, but both great nonetheless). We also have most of our checking/savings with Fidelity (the remainder in a local credit union). If you're planning on buying a house within the next 5 years, you probably shouldn't have that money in the stock market--it is volatile and who knows what could happen in 5 years. As far as picking investments in Roth IRAs, I recommend the same as most everyone else on here would--the Three-Fund Portfolio. If you don't want to get into picking funds at this point, you could use Target Date Retirement Funds in those accounts and be perfectly fine. They are typically more expensive than choosing your own funds, but the cost difference is almost negligible.

2) Increase contributions to 401(k)s and continue fully-funding IRAs. At the bare minimum, you should be contributing enough to the 401(k)s for any company match. With your income, you could afford to max both 401(k)s and Roth IRAs. If you want to do only the minimum for now so you can off student loans faster, that's fine, but there's also nothing wrong with maxing the retirement accounts while making smaller payments to student loans. Typically, any loan over 5% tempts me to pay it off rather than invest because I assume my investments will earn an average of 5% per year.

3) Use everything else available to pay off your student loans as quickly as possible. The intellectual way to do it (I think they usually call this the "debt avalanche") is to list all debts in order of highest interest rate to lowest interest rate, pay the minimum payment for each of them, and make all extra payments toward the loan with the highest interest rate until it's paid off, then work your way down the list. The Dave Ramsey way ("debt snowball") is to list them by smallest total loan amount to largest total loan amount, ignoring interest rate because you'll be paying them off so quickly it won't matter. Same method--all extra payments to the top of the list until it's gone and work your way down. I went with the debt snowball to pay off my student loans years ago--maybe not the smartest, but I knew almost nothing about money at the time and my wife and I are sitting pretty now so no complaints.

Hope my 2 cents helps and please keep Bogleheads updated on your progress! Always fun to see how someone decides to grow their net worth.
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ruralavalon
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Re: New to investing, looking for advice

Post by ruralavalon »

avelasco52 wrote: Thu Jan 23, 2020 2:43 am*I couldn't find on EJ website the ER for each fund unfortunately.
Low expenses are critical to long-term investing success.

I suggest moving each account away from Edward Jones to a low cost provider like Vanguard, Fidelity or Schwab. My personal preference is Vanguard. I like Vanguard's mutual structure, and like their website and app. Vanguard offers higher yield on its money market funds. Vanguard has the largest variety of low cost mutual funds and in addition to its own ETFs offers 1,800 commission free ETFs of other companies like BlackRock (iShares), Fidelity, PIMCO, Schwab, and State Street (SPDR). Vanguard, ETF list.

The emergency fund and house savings could be moved to either to a bank or one of those three fund companies.

avelasco52 wrote: Thu Jan 23, 2020 2:43 amMaxing out contributions to Roth IRA (10K right now) held in EdwardJones (friend is an advisor, and I wasn't sure how to invest when I started with them :oops: )
-11.3% Mutual Funds:
PGIM TOTAL RETURN BOND CL R6 (PTRQX), T ROWE PRICE U.S. TREASURY MONEY CL I (TRGXX)
-88.3% ETFs/CEFs: ISHARES CORE DIVIDEND GROWTH EXCHANGE TRADED FUND (DGRO), VANGUARD INTERNATIONAL EQUITY FTSE ALL WORLD EX USA ETF (VEU), SCHWAB US SMALL-CAP ETF (SCHA), SCHWAB US AGGREGATE BOND EXCHANGE TRADED FUND (SCHZ), SCHWAB STRATEGIC TR US MID CAP ETF (SCHM), ISHARES CORE S&P TOTAL U S STK MKT ETF (ITOT)
The funds and ETFs picked are pretty decent (if the expenses charged are minimal) but more complex than necessary in my opinion.

I would simply use 3 very diversified ETFs or funds like:
1) ISHARES CORE S&P TOTAL U S STK MKT ETF (ITOT) or Vanguard Total Stock Market ETF (VTI) or the fund (VTSAX);
2) VANGUARD INTERNATIONAL EQUITY FTSE ALL WORLD EX USA ETF (VEU) or Vanguard Total International Stock ETF (VXUS) or the fund (VTIAX); and
3) SCHWAB US AGGREGATE BOND ETF (SCHZ) or Vanguard Total Bond Market ETF (BND) or the fund (VBTLX).

My personal preference is traditional mutual funds rather than ETFs. Traditional mutual funds have simpler trading mechanics, it's easy to set up automatic contributions, and easy to set up automatic reinvestment of dividends.

avelasco52 wrote: Thu Jan 23, 2020 2:43 amEmergency fund of 7.5K in EdwardJones:
-MNY MKT FUND INVESTMENT SHARES
For your emergency fund you could consider:
1) high yield savings accounts or short-term CDs, for rates see www.bankrate.com; or
2) a good money market fund like Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 1.67%, or Vanguard Federal Money Market Fund (VMFXX) current SEC Yield = 1.59%; or
3) a very short-term bond fund like Vanguard Ultra Short-term Bond Fund (VUBFX) current SEC Yield = 1.96% or iShares Ultra Short-term Bond ETF (ICSH) current SEC Yield. = 1.97%.


avelasco52 wrote: Thu Jan 23, 2020 2:43 amSavings for a house (one day) in EdwardJones 10K, $500/month contribution:
-90.6% mutual funds:
BLACKROCK EQUITY DIVIDEND CL K (MKDVX), BLACKROCK HIGH YIELD MUNICIPAL CL K (MKYHX), BLACKROCK NATIONAL MUNICIPAL CL K (BNMLX), BLACKROCK TOTAL RETURN CL K (MPHQX), FEDERATED GOVERNMENT OBLIGATIONS CL PRM (GOFXX), FRANKLIN DYNATECH CL R6 (FDTRX), VICTORY SYCAMORE ESTABLISHED VALUE CL R6 (VEVRX)
-9.3% ETF & CEF:
ISHARES CORE DIVIDEND GROWTH EXCHANGE TRADED FUND (DGRO)
-.2% cash
I suggest that the contribution of $500 per month be temporarily stopped and redirected to paying off that "115K student loan debt at 4.45% interest".

In general money intended for a home purchase in a few years should be in very safe savings vehicles. You could consider the same options listed for the emergency fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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avelasco52
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Re: New to investing, looking for advice

Post by avelasco52 »

Again, Thank you everyone for your advice. So far, I have transferred all funds from EJ to Vanguard, except for a handful of mutual funds which must be liquidated: MKDVX, MKYHX, BNMLX, MPHQX, GOFXX, FDTRX, VEVRX; totalling about $9,200. Regarding liquidating the funds, I am wondering if there would be an ideal time of year to do this for tax purposes, i.e. waiting until the end of the year. I do not completely understand the taxes of liquidating funds.

I am also in a unique situation with my jobs now. My full-time job is currently less than half-time due to covid, but my company will continue to pay for health insurance as if I am working full-time. My thought was to maximize my 401k contribution (no company match). There are many Vanguard investment options through my full-tim job including target retirement funds. Right now I am contributing 15% of each paycheck: 90% VIMAX (ER .05) and 10% VBILX (ER .07).

My part-time/per diem job has also significantly increased in hours. Because I am a per diem employee, my hourly rate is high (higher than my full-time job), but I have no retirement options, and do not pay for health insurance through this job. Overall my monthly income is about the same as before [covid] if not higher while working slightly less hours. I am certainly very fortunate in this situation and am grateful. This will likely be the case for the next several weeks or couple months.

My student loans are in forebearance for another few weeks, so I have a stash of cash in my checking accout. My other thought was to purchase a total stock market index fund to include in my Vanguard Roth IRA, and to maximize contributions to this, or to make a large one-time payment to my student loans (4.25% interest, $113K balance).

Mostly, I just want to do the smartest thing for my situation, and would appreciate any insight. Thank you
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ruralavalon
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Re: New to investing, looking for advice

Post by ruralavalon »

I suggest that you "make a large one-time payment to [your] student loans (4.25% interest, $113K balance)."
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
whereskyle
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Re: New to investing, looking for advice

Post by whereskyle »

abuss368 wrote: Thu Jan 23, 2020 9:44 pm One of my favorite book sis from John C. Bogle "The Little Book of Common Sense Investing"
This is an excellent place to start.

As for your debt situation, I am there too. I devote about three times as much money per month to pay down debt than I do to my investments, but I ALWAYS invest something every week, no matter how small. The simplest way to think about the need for investing is: Over 40 years, every $1 invested in a U.S. total stock market index fund (I use VTSAX and the ETF VTI to gain exposure to the total U.S. market) is extremely likely based on long-term historical evidence to become, at the very least, $10. The trick to achieving these spectacular returns is time in the market. The more invested earlier the better. So, in my view, under no circumstances should you invest $0 for any period of time, even if you are being extremely aggressive in paying down your debt. Find a way to pay your debt down as quickly as possible, but start putting a little something into a low-cost, total-market index fund as well.

HOWEVER, a basic rule of investing is that you never sell for less than you bought. That means you need to have a substantial emergency fund that will protect your investments from your current needs in the event you need more $ than you are earning. Given the size of your recurring debt payments, you might want a slightly bigger emergency fund, just so you never have to worry about needing the $ you've invested before its ready.

It is very popular here to recommend people pay down all their debt before starting to invest. I, thankfully, have acceptable interest rates, and personally refuse to leave years of time in the market on the table, so I've developed my 3:1 debt-to-investment ratio. Looking forward to the day in the next few years when all of that money goes to investing.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
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abuss368
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Re: New to investing, looking for advice

Post by abuss368 »

whereskyle wrote: Wed Apr 29, 2020 3:05 pm
abuss368 wrote: Thu Jan 23, 2020 9:44 pm One of my favorite book sis from John C. Bogle "The Little Book of Common Sense Investing"
This is an excellent place to start.

As for your debt situation, I am there too. I devote about three times as much money per month to pay down debt than I do to my investments, but I ALWAYS invest something every week, no matter how small. The simplest way to think about the need for investing is: Over 40 years, every $1 invested in a U.S. total stock market index fund (I use VTSAX and the ETF VTI to gain exposure to the total U.S. market) is extremely likely based on long-term historical evidence to become, at the very least, $10. The trick to achieving these spectacular returns is time in the market. The more invested earlier the better. So, in my view, under no circumstances should you invest $0 for any period of time, even if you are being extremely aggressive in paying down your debt. Find a way to pay your debt down as quickly as possible, but start putting a little something into a low-cost, total-market index fund as well.

HOWEVER, a basic rule of investing is that you never sell for less than you bought. That means you need to have a substantial emergency fund that will protect your investments from your current needs in the event you need more $ than you are earning. Given the size of your recurring debt payments, you might want a slightly bigger emergency fund, just so you never have to worry about needing the $ you've invested before its ready.

It is very popular here to recommend people pay down all their debt before starting to invest. I, thankfully, have acceptable interest rates, and personally refuse to leave years of time in the market on the table, so I've developed my 3:1 debt-to-investment ratio. Looking forward to the day in the next few years when all of that money goes to investing.
Sounds like a plan.
John C. Bogle: “Simplicity is the master key to financial success."
Topic Author
avelasco52
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Joined: Thu Jan 23, 2020 2:14 am
Location: CA

Re: New to investing, looking for advice

Post by avelasco52 »

Awesome, Thank you for the advice. I am actually reading this book right now and am about 2/3 done with it. I've also since read The Simple Path to Wealth and Bogle's Guide to Investing. Great material, certainly a lot to digest, but definitely helpful.

Right now, I am pretty comfortably set with about $7.5K for an emergency fund in Vanguard Federal Money Market Fund. I would like to completely break from EJ, but want to minimize taxes from liquidating the assets that I have with them. I originally started an account to save for a down payment on a home, which is in a mix of mutual funds that cannot be transferred to Vanguard. Now I would like to put that money somewhere that is less volatile. Is there an optimal way I should go about doing this? Thanks again
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