I am 16, Bogleheads help me be rich one day

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Sandtrap
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Re: I am 16, Bogleheads help me be rich one day

Post by Sandtrap » Thu Mar 26, 2020 11:29 am

tibbitts wrote:
Thu Mar 26, 2020 11:15 am
It seems like half the supposed-Bogleheads who've been posting lately don't believe any of us will survive Covid-19, so maybe just enjoy yourself while you're still alive.

Seriously though you're overthinking this. Having a Roth is nice, especially if somebody will be matching ((or just plain making) your contributions, which seems to happen for many younger people here. Keep it all in a target fund or total market fund. Nobody knows where our QQQ idea came from but I suppose if you want... whatever. Just pick one thing and stick with it.

For taxable put everything into a bank or MM account of your choice. The rate doesn't matter at the amounts you have, but if you want to choose one with relatively high rates. Just don't waste time moving funds around monthly for .1%. You say you have no expenses but you do - someone else is just paying them. Some day they won't and you may have to use your savings.

What will matter is education and eventually employment and spending less than you make, not minor differences in how you invest.
+1
Well said.
Wise advice.

At age 16, a Masters Degree in Engineering or Computer Science, etc, seems like a long way away and an extreme amount of effort that might not be exciting. But, educational levels and achievements like have lifetime earning's and career benefits that are immeasurable. Not everyone can do it. Hard work and perseverance for that long is not in everyone's mindset. Is it in yours?

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

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Quirkz
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Re: I am 16, Bogleheads help me be rich one day

Post by Quirkz » Thu Mar 26, 2020 11:55 am

Cyclesafe wrote:
Thu Mar 19, 2020 8:03 am
I think all would agree here that there is a basic and unavoidable level of education that must be mastered for nearly everyone to function most effectively. Despite what you might think now, at 16 years of age you are far, far away from this level of competence. This stuff must be learned (or relearned) at some point; so the excessive spare time you have on your hands now (under semi-lockdown) can be best utilized pushing for mastery.
This is an exceptionally valuable point. Expect to come back to this stuff every few years, 5 years at most. It should be an ongoing, intermittent research project. I went out and tried to learn everything I could about regular person investing in 1998, when I was fresh out of college, and things have changed so many times since. Some of the top mutual funds of the time have gone bankrupt, the expectations about costs have shifted dramatically, retirement contribution limits and plans are always shifting. Plus sometimes it just takes multiple passes for things to sink in, or as you move to different phases in your life priorities will shift, and with it the things you need to pay attention to.

At age 16, investment is great, but your real emphasis should probably be on education and future earnings. Figure out what you love to do (you'll be doing it a long time) and how to get paid reasonably well for it. Learn how to budget and then master it. But also keep investing and learn how to deal with the ups and downs, make your mistakes early with small amounts, so you can do better later.

finite_difference
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Re: I am 16, Bogleheads help me be rich one day

Post by finite_difference » Thu Mar 26, 2020 12:12 pm

FI4LIFE wrote:
Thu Mar 19, 2020 8:15 am
MiloMoney wrote:
Thu Mar 19, 2020 12:13 am
I am 16 and last year made $700 in income as a parking lot attendant as well as earning $30 a week dog walking. I am a saver and stash or invest around 80% of my income.

Emergency funds: I do not currently have expenses but have $1,100 in the bank.

Debt: None

Tax Filing Status: Single

Tax Rate: Not Applicable /b]

State of Residence: Minnesota

Age: 16

Desired Asset allocation: Whatever makes me the most money

Please provide a hint as to the size of your current total portfolio (as in high four-figures, mid five-figures, low six-figures, etc.) What might be appropriate for a very large portfolio might not be appropriate for a new investor.


I will be transparent here, no need in making you guess. I have $1,800 in my Vanguard Roth IRA and $40 in a Robinhood brokerage.

Current retirement assets

Taxable
0% cash (for investing – do not include emergency funds)
17.38% Global X Nigeria ETF (NGE) (0.89% Expense Ratio)
42.20% Stag Industrial (STAG)
7.83% Urban One (UONE)
0.07% Hexindai (HX)
8.27% A.P Moller Maersk (AMKBY)
1.71% Canntrust (CTST)
16.41% Waitr Holdings (WTRH)
0.58% Globalstar (GSAT)
1.83% Inuvo (INUV)
2.65% Chanticleer Holdings (BURG)

Roth IRA at Vanguard
100% PowerShares QQQ Trust, Series 1 (QQQ)

Contributions

New annual Contributions
$2,102.00 his IRA/Roth IRA 2019
$107.33 his IRA/Roth IRA 2020



Questions:
1. I moved my money from my a Vanguard Targeted Retirement to QQQ is this right? I heard that I should be more aggressive.

2. I am in a US Bank Star Savers club, I am restricted to six withdrawals a month and only get 0.005% interest is this bad? I think it is terrible. I want to change to the Sallie Mae High Yield Savings 1.4% APY is this a good idea? Should I do a money market?

3. How do I budget?
I've never seen a 16 year old with such perfect grammar, spelling and punctuation coupled with a vast knowledge of investing whilst simultaneously having a net worth of a thousand bucks. Sorry I don't buy it.
Actually, I think young people are smarter than ever before!

And the comma splice has a bone to pick with your point about perfect grammar ;)

To the OP: your portfolio is a mess and you should simplify/optimize by adopting the Taylor Larimore 3-fund portfolio.

Overall, by finding this site at such an early age, learning about personal finance, and understanding the wisdom of fully funding a Roth IRA puts you years if not decades ahead of your peers.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

fwellimort
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Re: I am 16, Bogleheads help me be rich one day

Post by fwellimort » Thu Mar 26, 2020 12:14 pm

Net worth low 6 figures. Age 23.

I think you shouldn't approach the stock market with the mindset of 'get rich someday'.
I look at the stock market more as a place to beat inflation long term (if inflation even exists).
Also, like @bluquark has stated, I too don't think QQQ is more aggressive. Most tech companies have matured quite a bit and I would say a company like Google has less 'risk' than a company like 'American Airlines'.
I'm a fan of the concept of VT although due to tax reasons, favor more towards VTSAX/VTIAX (for foreign tax credits).

At your age, a good education that is 'marketable' is far more important (generally) than investing in the stock market.
I would say to prioritize (invest) on [in no order]:
1. Mathematics (Art of Problem Solving are great books https://artofproblemsolving.com/store)
[Solution guide is necessary and sold separately. Just know these books are very very difficult and even Introduction level can be too difficult for you if you don't come from a competitive background. However, the investment is well worth the struggles in the long run]
2. Learning to enjoy reading (https://www.youtube.com/watch?v=Y9ZzRTj-GGs)
3. Probability and Statistics (Probably the most important in your lifetime because statistics is used almost everywhere)
4. Communication skills
5. Social skills (be a like-able person with many friends [and prioritize especially on the few friends that you really enjoy being around with]. Don't hate anyone)
6. Basic Python coding (regardless of your career, knowing basic coding can be of great help in today's market "Automate the Boring Stuff with Python Programming" is a great start)
7. Enjoying life (staying positive is of immense benefit as people will gravitate towards you more)

To your #2, for a savings account, something like marcus.com is a better option currently.

For your #3, learning some basic Excel can be of help for that.

ddurrett896
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Re: I am 16, Bogleheads help me be rich one day

Post by ddurrett896 » Thu Mar 26, 2020 12:25 pm

oldfort wrote:
Thu Mar 26, 2020 11:01 am
The way to get rich is to have a high paying job.
"It's not about what you make, it's what you save."

fwellimort
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Re: I am 16, Bogleheads help me be rich one day

Post by fwellimort » Thu Mar 26, 2020 12:30 pm

ddurrett896 wrote:
Thu Mar 26, 2020 12:25 pm
"It's not about what you make, it's what you save."
It's much easier to invest more when you earn more.

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Taylor Larimore
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Four Suggestions

Post by Taylor Larimore » Thu Mar 26, 2020 12:44 pm

MiloMoney:

I will offer four suggestions to "help me be rich one day.":

1. Sell your individual stocks. Now is an especially good time before they incur taxable capital gains which will make them difficult to sell later. Read what experts say about individual stocks HERE.

2. Read this short booklet by a respected author and advisor to millionaires: IfYouCan.

When I started investing in 1950 the S&P 500 stocks were priced about 25. Today the S&P 500 stocks are priced at 2,571 (not including dividends).

3. Lesson learned: Buy the total stock market (VTSMX)-- then stay-the-course.

4. Read my "Simplicity" link below.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "My preferred index fund happens to be the total stock market which includes large, medium, and small stocks."
"Simplicity is the master key to financial success." -- Jack Bogle

oldfort
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Re: I am 16, Bogleheads help me be rich one day

Post by oldfort » Thu Mar 26, 2020 1:09 pm

ddurrett896 wrote:
Thu Mar 26, 2020 12:25 pm
oldfort wrote:
Thu Mar 26, 2020 11:01 am
The way to get rich is to have a high paying job.
"It's not about what you make, it's what you save."
A high income is what gives you the ability to save a lot. If you earn $50k/year, it's impossible to save $50k/year. If you earn $300k/year, you can save $50k/year while still maintaining a high level of spending.

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Re: Four Suggestions

Post by abuss368 » Thu Mar 26, 2020 1:29 pm

Taylor Larimore wrote:
Thu Mar 26, 2020 12:44 pm
MiloMoney:

I will offer four suggestions to "help me be rich one day.":

1. Sell your individual stocks. Now is an especially good time before they incur taxable capital gains which will make them difficult to sell later. Read what experts say about individual stocks HERE.

2. Read this short booklet by a respected author and advisor to millionaires: IfYouCan.

When I started investing in 1950 the S&P 500 stocks were priced about 25. Today the S&P 500 stocks are priced at 2,571 (not including dividends).

3. Lesson learned: Buy the total stock market (VTSMX)-- then stay-the-course.

4. Read my "Simplicity" link below.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "My preferred index fund happens to be the total stock market which includes large, medium, and small stocks."
Excellent advice that all Bogleheads would be wise to follow at any age. I am thankful we have a 16 year old who is asking questions.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

nolapepper
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Re: I am 16, Bogleheads help me be rich one day

Post by nolapepper » Thu Mar 26, 2020 2:07 pm

Don't forget about the 7% interest rate deal from Chevron credit union for the first $1000. This is only for minor members.

RonSwanson
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Re: I am 16, Bogleheads help me be rich one day

Post by RonSwanson » Thu Mar 26, 2020 2:21 pm

A few tips:

1) Learn how to and negotiate your total compensation as you move up through your career. I have had major salary increases due to negotiations and see co-workers who could get paid more if only they did the same thing.

2) Depending on your career and industry, get into positions with lots of equity compensation. Often times you can trade a small amount of salary for a huge boost in ownership.

3) Get a job that you mostly enjoy, because getting rich may not happen for one reason or another.

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 5:51 pm

minimalistmarc wrote:
Thu Mar 26, 2020 2:52 am
MiloMoney wrote:
Thu Mar 19, 2020 12:13 am
I am 16 and last year made $700 in income as a parking lot attendant as well as earning $30 a week dog walking. I am a saver and stash or invest around 80% of my income.

Emergency funds: I do not currently have expenses but have $1,100 in the bank.

Debt: None

Tax Filing Status: Single

Tax Rate: Not Applicable /b]

State of Residence: Minnesota

Age: 16

Desired Asset allocation: Whatever makes me the most money

Please provide a hint as to the size of your current total portfolio (as in high four-figures, mid five-figures, low six-figures, etc.) What might be appropriate for a very large portfolio might not be appropriate for a new investor.


I will be transparent here, no need in making you guess. I have $1,800 in my Vanguard Roth IRA and $40 in a Robinhood brokerage.

Current retirement assets

Taxable
0% cash (for investing – do not include emergency funds)
17.38% Global X Nigeria ETF (NGE) (0.89% Expense Ratio)
42.20% Stag Industrial (STAG)
7.83% Urban One (UONE)
0.07% Hexindai (HX)
8.27% A.P Moller Maersk (AMKBY)
1.71% Canntrust (CTST)
16.41% Waitr Holdings (WTRH)
0.58% Globalstar (GSAT)
1.83% Inuvo (INUV)
2.65% Chanticleer Holdings (BURG)

Roth IRA at Vanguard
100% PowerShares QQQ Trust, Series 1 (QQQ)

Contributions

New annual Contributions
$2,102.00 his IRA/Roth IRA 2019
$107.33 his IRA/Roth IRA 2020



Questions:
1. I moved my money from my a Vanguard Targeted Retirement to QQQ is this right? I heard that I should be more aggressive.

2. I am in a US Bank Star Savers club, I am restricted to six withdrawals a month and only get 0.005% interest is this bad? I think it is terrible. I want to change to the Sallie Mae High Yield Savings 1.4% APY is this a good idea? Should I do a money market?

3. How do I budget?



You’re doing great. I would stick to one fund only like vanguard all world, which means you own a piece of every company in the world.

Other than that, have fun, work hard, talk to lots if girls (or boys).



I appreciate your advice, I think I will get back in a Target Date and follow the course.

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 5:56 pm

dratkinson wrote:
Thu Mar 26, 2020 3:19 am
MiloMoney wrote:
Thu Mar 26, 2020 1:13 am
...
Thank you. You are wise. It's 1 in the morning and I would message you with a better response later. One question on bank accounts, I have had my account at US Bank for 7 years they say that my account relationship is valuable for credit and loans in the future is that true?
Bottom line. You may not find a bank/CU that has all of the features you want. So pick one that provided the most convenient features for your life. And if you need a new feature later, then find another bank/CU that provides it, and add it to your financial life... while keeping your other accounts.
I think you are right, I am going to do this with my accounts:

1. Checking - Keep US Bank On Paper
2. Checking - Penfed Credit Union
2. 6 Month Emergency Fund (Will start when 18) - Money Market at some online bank

Topic Author
MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 5:58 pm

jjface wrote:
Thu Mar 26, 2020 2:10 am
You are doing a lot of things right - you are earning, saving, asking questions and learning! A roth IRA is also a great place to sock away your money right now.

One thing you need to understand better is risk. All risk is not good risk. There are things you can do to drastically reduce your risk and not impact your expected return.

EG QQQ is tech heavy and if there is a tech crash like in 2000/2001 you will be hit hard. It dropped 80% at one point. Don't overestimate your ability to keep a level head faced with that especially when the rest of the market is doing twice as well. You may be tempted to bail and lock in losses. How would you feel if you work your socks off for several years and make $10,000 and then one day you look at your balance and it is $2,000?! I know I would have a heart attack. Tech may also underperform for a long time and you may wish you have invested elsewhere. By diversifying across all sectors with a total stock market fund you reduce risk whilst keep expected returns high.

Then there is your taxable account which you are filling with lots of little things I have never even heard of. Portfolios do not need to be complicated and I believe firmly in simplicity for most people is the best way to go. One well diversified fund is better than trying to pick a million stocks and funds that may have overlap or too much risk in one area, introduce manager risk, or specific stock risk. All of which you can remove by keeping things well diversified and simple. With $40 in the brokerage some of those holding must be pennies?! Not needed at all.

So yes a target retirement fund is a good idea or simply picking the total stock market index fund is perfectly fine at your age if you want to max expected returns. But do read the Ifyoucan booklet already posted and consider adding some bonds to reduce risk a bit (target retirement starts at 10% bonds).

Good luck!
I don't want to lose everything in a crash. I want some bonds, time to hop back onto the targeted train.

Topic Author
MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:02 pm

Thesaints wrote:
Thu Mar 26, 2020 2:26 am
MiloMoney wrote:
Thu Mar 19, 2020 12:13 am
I am 16, Bogleheads help me be rich one day
The first thing you have to realize is that with this kind of capital and income it does not matter if you get a 0.005% interest, or 15%. You'll never make any substantial money after factoring in taxes and inflation.

If you want to be wealthy the surest way is going to a good graduate school, which will greatly increase your chances not only of finding a very well paying job, but also a wife who makes good money, or already has got it.

If instead your objective is to become very rich, as in tens of millions and more, try to be lucky. Very lucky.
I will keep that in mind. The idea of graduate school is not very attractive to me.

Topic Author
MiloMoney
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Re: Key Takeaways

Post by MiloMoney » Thu Mar 26, 2020 6:04 pm

fortyofforty wrote:
Thu Mar 26, 2020 6:21 am
MiloMoney wrote:
Thu Mar 26, 2020 2:36 am
Image
Key Takeaways
  • Get back into a targeted retirement.
    Invest and save like a madman and let compound interest do the heavy lifting.
    Use the time that passive investing gives to hone my trade and earn more money to invest more.
    Use the time that passive investing gives to live a rich and happy life.
Random Questions
  • I am reaching the age where credit cards are coming. Should I stay away from them? Revolving debt scares me.
Thank you again to everyone!
Credit cards are a tool. If you can pay off the balance every month, and collect some reward (e.g. cash back, airline miles, discounts for things you need to buy) then they can be great. If you can't be disciplined and pay off the balance, they are a dangerous path to go down. Once you carry a balance, interest is charged on everything else you buy until the entire balance is paid off, and even then there can be a lag of a month or two. OTOH, debit cards pull money right out of your bank account, which is not appealing to me. When you purchase something with a credit card, you sometimes get an extended warranty and you also get protection in case the seller does not provide the promised item, both of which can be valuable. Again, like fire, credit cards are a tool that, when used wisely, are very valuable; when used foolishly, they can burn you.
Dave Ramsey is a monster for pushing high fee mutual funds and saying only liberals care about fees. I do think he right about paying with cash. The amount of organization required with credit cards seems high.

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:05 pm

3funder wrote:
Thu Mar 26, 2020 7:47 am
The fact that, at your age, you're even inquiring about this, tells me that you're likely to achieve your financial goals.

Thank you! :moneybag

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:06 pm

Wiggums wrote:
Thu Mar 26, 2020 8:01 am
3funder wrote:
Thu Mar 26, 2020 7:47 am
The fact that, at your age, you're even inquiring about this, tells me that you're likely to achieve your financial goals.
+1

Good luck to you.
Thank you Chief.

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:07 pm

rustymutt wrote:
Thu Mar 26, 2020 8:12 am
OK, Get a college education, and go to work daily, on time, and save as much as possible in all ways. Roth, 401K, any way to save.
And if you do that for 30 years, you'll wake up 1 am and say to yourself, "wow I'm a millionaire". But nothing changes then because you have learned to live below your means, and are quite content with what you have. Anyone can do this, even without a college degree, but it's harder to find the dollars without a degree. It's not a secret that in the US anyone can have wealth. But lazy people not so much. Good luck. :moneybag
I like that. My fear is becoming like my grandpa. He was a poor immigrant and came to the US, saved all his money and invested in CDs and annuities. He can't spend money, it pains him.

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:11 pm

tindel wrote:
Thu Mar 26, 2020 9:38 am
MiloMoney wrote:
Thu Mar 19, 2020 12:13 am
2. I am in a US Bank Star Savers club, I am restricted to six withdrawals a month and only get 0.005% interest is this bad? I think it is terrible. I want to change to the Sallie Mae High Yield Savings 1.4% APY is this a good idea? Should I do a money market?

3. How do I budget?
2. Most bank savings accounts offer lousy rates. 0.005% is half of the lousy rate I got when I was your age (before the internet - if you can believe there were such a period). This rate was one of the reasons I gave up on saving until my late 20's. I'd be much richer if I knew there were options. I remember getting about one penny each month on my $100 I had saved. It just hadn't been worth the work to save the money. I wish then that, like you, I had explored my options... I would be much wealthier today if I had. So good on you for exploring.

I like Sallie Mae, and I don't think they get enough love around here - likely due to the fact that they are one of the largest student load debt lenders. I really like their Money Market account over their High Yield, personally... a slightly better rate than their high yield savings, but with check writing ability. The rates have remained competitive over the years - not top, but competitive. A few down sides 1) All deposits are held for 5 business days. 2) they hold deposits $5000 or more for 10 business days - or they used to, I can't find that on their website anymore. 3) Their website is poor - even after their recent 'improvements'. 4) Customer service is adequate, but slow.

3. Search for "You Need A Budget" to learn how to budget.
I appreciate this, you are a kind soul to take time out of your 24 hours to write this. I am going to need an emergency fund and I think I will likely use Sallie Mae or another mainly online bank. Thanks for the tip on the money market and budget site!

What is the difference between a money market and a high yield savings?

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:14 pm

a_movable_life wrote:
Thu Mar 26, 2020 9:54 am
You can Roth before age 21. Many companies even if you get in a 18 won't let you invest in the 401K until 21. I've worked with RN's who can't contribute the first year or two after school.

Right now consider how to leverage as low a cost/free college education, and pick a degree that leads to a career that pays well. It's a lot easier to get rich on the salaries that get talked about here frequently than making 40K a year. Coming out with low or no debt gives you a big leg up when you get out.

You may also want to consider the trades if you are hands on. A good Electrician or Plumber can be very busy just on word of mouth. That also dovetails very well if you want to do real estate. So many tax benefits to being self employed. You can always go back for a business degree later.
You have good advice. I think debt is the enemy of wealth creation.

Topic Author
MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:16 pm

knowledge wrote:
Thu Mar 26, 2020 9:59 am
It's fine to be financially motivated, but don't be short-sighted. Your highest return will come from investing in yourself. That's primarily through education. Sure, $6k into a Roth at the age of 16 is awesome, but investing that into your human capital is likely even more so.

If you can do both...amazing.
I plan on doing so, I am applying for college soon. I am doing in AA in Digital Marketing getting all the Facebook, Google and tech certifications. I think I can always freelance to make side cash with that credentials and be a specialist. The AA transfers into a private college with 50% acceptance rate!

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:16 pm

MindBogler wrote:
Thu Mar 26, 2020 10:33 am
MiloMoney wrote:
Thu Mar 26, 2020 1:04 am
Thank you for responding! I think aggressive is the way to go; my sibling's portfolio drives me nuts. She is 60% Stocks 40% Bonds at age 18 in a general brokerage saving for retirment.

I think I'm going to keep the phrase "get rich slow pathway." I love it!
At your age you have the most important resource for building wealth: time.

The allocation of your portfolio is hardly relevant. How much you can save from each paycheck matters far more. Avoiding behavioral traps like market timing and being overly ambitious (greedy). Stick to index funds and don't buy individual stocks.

I prefer closer to 75% stocks / 25% bonds but I would happily argue your sibling's portfolio is quite wise (tax-efficient placement of the funds notwithstanding).

Some if I am understanding this right with compound interest the secret is just time?

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:17 pm

cashboy wrote:
Thu Mar 26, 2020 10:35 am
learn how to enjoy and appreciate each and every moment of life in good times and bad times.

be the person that possess the positive character traits you wish everyone else had.

if you can master that then even if you only have $10 in your wallet you will be one of the richest people alive.

My parents think I am cynical and am working on meditating to get better. Everyone likes nice happy people.

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MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:18 pm

ddurrett896 wrote:
Thu Mar 26, 2020 10:51 am
Setup a Target Date Fund with auto contributions and forget about it.

I was around 18 years old when the 2008 recession hit and In 2009, I checked my Roth IRA and the value was like 50% of what I had contributed. What did I do? Stop contributing.

2010 - 2012 didn't contribute at all. In 2013, I setup automatic contribution each month. So easy and I don't even think about it. Don't make the same mistake.

Invest early and often. It takes around 25 years to make $1mm, then 8 more years to hit $2mm, 6 years for $3mm and 4 more years to hit $4mm.

18 years old + 25 + 8 + 6 + 4 = 57 years old. You're in a GREAT POSITION!
So I could retire at age at age 57!

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MiloMoney
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Joined: Wed Mar 18, 2020 11:37 pm

Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:19 pm

oldfort wrote:
Thu Mar 26, 2020 11:01 am
The way to get rich is to have a high paying job.
In terms of cash flow wealth the people I know are either high level jobs (Doctor, Lawyer) or business owners. I know a few home contractors with crews who can make 150 grand in a good year.

Topic Author
MiloMoney
Posts: 49
Joined: Wed Mar 18, 2020 11:37 pm

Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:22 pm

tibbitts wrote:
Thu Mar 26, 2020 11:15 am
It seems like half the supposed-Bogleheads who've been posting lately don't believe any of us will survive Covid-19, so maybe just enjoy yourself while you're still alive.

Seriously though you're overthinking this. Having a Roth is nice, especially if somebody will be matching ((or just plain making) your contributions, which seems to happen for many younger people here. Keep it all in a target fund or total market fund. Nobody knows where our QQQ idea came from but I suppose if you want... whatever. Just pick one thing and stick with it.

For taxable put everything into a bank or MM account of your choice. The rate doesn't matter at the amounts you have, but if you want to choose one with relatively high rates. Just don't waste time moving funds around monthly for .1%. You say you have no expenses but you do - someone else is just paying them. Some day they won't and you may have to use your savings.

What will matter is education and eventually employment and spending less than you make, not minor differences in how you invest.
You got it.

Topic Author
MiloMoney
Posts: 49
Joined: Wed Mar 18, 2020 11:37 pm

Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:22 pm

Sandtrap wrote:
Thu Mar 26, 2020 11:29 am
tibbitts wrote:
Thu Mar 26, 2020 11:15 am
It seems like half the supposed-Bogleheads who've been posting lately don't believe any of us will survive Covid-19, so maybe just enjoy yourself while you're still alive.

Seriously though you're overthinking this. Having a Roth is nice, especially if somebody will be matching ((or just plain making) your contributions, which seems to happen for many younger people here. Keep it all in a target fund or total market fund. Nobody knows where our QQQ idea came from but I suppose if you want... whatever. Just pick one thing and stick with it.

For taxable put everything into a bank or MM account of your choice. The rate doesn't matter at the amounts you have, but if you want to choose one with relatively high rates. Just don't waste time moving funds around monthly for .1%. You say you have no expenses but you do - someone else is just paying them. Some day they won't and you may have to use your savings.

What will matter is education and eventually employment and spending less than you make, not minor differences in how you invest.
+1
Well said.
Wise advice.

At age 16, a Masters Degree in Engineering or Computer Science, etc, seems like a long way away and an extreme amount of effort that might not be exciting. But, educational levels and achievements like have lifetime earning's and career benefits that are immeasurable. Not everyone can do it. Hard work and perseverance for that long is not in everyone's mindset. Is it in yours?

j :happy
Graduate school seems like a lot of debt. I'm not sure I am up for that.

Topic Author
MiloMoney
Posts: 49
Joined: Wed Mar 18, 2020 11:37 pm

Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:24 pm

Quirkz wrote:
Thu Mar 26, 2020 11:55 am
Cyclesafe wrote:
Thu Mar 19, 2020 8:03 am
I think all would agree here that there is a basic and unavoidable level of education that must be mastered for nearly everyone to function most effectively. Despite what you might think now, at 16 years of age you are far, far away from this level of competence. This stuff must be learned (or relearned) at some point; so the excessive spare time you have on your hands now (under semi-lockdown) can be best utilized pushing for mastery.
This is an exceptionally valuable point. Expect to come back to this stuff every few years, 5 years at most. It should be an ongoing, intermittent research project. I went out and tried to learn everything I could about regular person investing in 1998, when I was fresh out of college, and things have changed so many times since. Some of the top mutual funds of the time have gone bankrupt, the expectations about costs have shifted dramatically, retirement contribution limits and plans are always shifting. Plus sometimes it just takes multiple passes for things to sink in, or as you move to different phases in your life priorities will shift, and with it the things you need to pay attention to.

At age 16, investment is great, but your real emphasis should probably be on education and future earnings. Figure out what you love to do (you'll be doing it a long time) and how to get paid reasonably well for it. Learn how to budget and then master it. But also keep investing and learn how to deal with the ups and downs, make your mistakes early with small amounts, so you can do better later.
You have great advice but a terrifying avatar.

Topic Author
MiloMoney
Posts: 49
Joined: Wed Mar 18, 2020 11:37 pm

Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:26 pm

finite_difference wrote:
Thu Mar 26, 2020 12:12 pm
FI4LIFE wrote:
Thu Mar 19, 2020 8:15 am
MiloMoney wrote:
Thu Mar 19, 2020 12:13 am
I am 16 and last year made $700 in income as a parking lot attendant as well as earning $30 a week dog walking. I am a saver and stash or invest around 80% of my income.

Emergency funds: I do not currently have expenses but have $1,100 in the bank.

Debt: None

Tax Filing Status: Single

Tax Rate: Not Applicable /b]

State of Residence: Minnesota

Age: 16

Desired Asset allocation: Whatever makes me the most money

Please provide a hint as to the size of your current total portfolio (as in high four-figures, mid five-figures, low six-figures, etc.) What might be appropriate for a very large portfolio might not be appropriate for a new investor.


I will be transparent here, no need in making you guess. I have $1,800 in my Vanguard Roth IRA and $40 in a Robinhood brokerage.

Current retirement assets

Taxable
0% cash (for investing – do not include emergency funds)
17.38% Global X Nigeria ETF (NGE) (0.89% Expense Ratio)
42.20% Stag Industrial (STAG)
7.83% Urban One (UONE)
0.07% Hexindai (HX)
8.27% A.P Moller Maersk (AMKBY)
1.71% Canntrust (CTST)
16.41% Waitr Holdings (WTRH)
0.58% Globalstar (GSAT)
1.83% Inuvo (INUV)
2.65% Chanticleer Holdings (BURG)

Roth IRA at Vanguard
100% PowerShares QQQ Trust, Series 1 (QQQ)

Contributions

New annual Contributions
$2,102.00 his IRA/Roth IRA 2019
$107.33 his IRA/Roth IRA 2020



Questions:
1. I moved my money from my a Vanguard Targeted Retirement to QQQ is this right? I heard that I should be more aggressive.

2. I am in a US Bank Star Savers club, I am restricted to six withdrawals a month and only get 0.005% interest is this bad? I think it is terrible. I want to change to the Sallie Mae High Yield Savings 1.4% APY is this a good idea? Should I do a money market?

3. How do I budget?
I've never seen a 16 year old with such perfect grammar, spelling and punctuation coupled with a vast knowledge of investing whilst simultaneously having a net worth of a thousand bucks. Sorry I don't buy it.
Actually, I think young people are smarter than ever before!

And the comma splice has a bone to pick with your point about perfect grammar ;)

To the OP: your portfolio is a mess and you should simplify/optimize by adopting the Taylor Larimore 3-fund portfolio.

Overall, by finding this site at such an early age, learning about personal finance, and understanding the wisdom of fully funding a Roth IRA puts you years if not decades ahead of your peers.
You got me on the comma. I'm just messing around with my Robinhood and dump it when the stock market gets high again. Thank you for this compliment, I tried to explain to my friend compound interest and a ROTH and he just brushed me off.

Topic Author
MiloMoney
Posts: 49
Joined: Wed Mar 18, 2020 11:37 pm

Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 6:28 pm

fwellimort wrote:
Thu Mar 26, 2020 12:14 pm
Net worth low 6 figures. Age 23.

I think you shouldn't approach the stock market with the mindset of 'get rich someday'.
I look at the stock market more as a place to beat inflation long term (if inflation even exists).
Also, like @bluquark has stated, I too don't think QQQ is more aggressive. Most tech companies have matured quite a bit and I would say a company like Google has less 'risk' than a company like 'American Airlines'.
I'm a fan of the concept of VT although due to tax reasons, favor more towards VTSAX/VTIAX (for foreign tax credits).

At your age, a good education that is 'marketable' is far more important (generally) than investing in the stock market.
I would say to prioritize (invest) on [in no order]:
1. Mathematics (Art of Problem Solving are great books https://artofproblemsolving.com/store)
[Solution guide is necessary and sold separately. Just know these books are very very difficult and even Introduction level can be too difficult for you if you don't come from a competitive background. However, the investment is well worth the struggles in the long run]
2. Learning to enjoy reading (https://www.youtube.com/watch?v=Y9ZzRTj-GGs)
3. Probability and Statistics (Probably the most important in your lifetime because statistics is used almost everywhere)
4. Communication skills
5. Social skills (be a like-able person with many friends [and prioritize especially on the few friends that you really enjoy being around with]. Don't hate anyone)
6. Basic Python coding (regardless of your career, knowing basic coding can be of great help in today's market "Automate the Boring Stuff with Python Programming" is a great start)
7. Enjoying life (staying positive is of immense benefit as people will gravitate towards you more)

To your #2, for a savings account, something like marcus.com is a better option currently.

For your #3, learning some basic Excel can be of help for that.
It's going on my list. I got a notification that I missed an few English papers and spend like 4 hours writing and editing. My answers are spartan, I am wiped.

I will gather up all this and write up a plan for review later.

fortyofforty
Posts: 2083
Joined: Wed Mar 31, 2010 12:33 pm

Re: Key Takeaways

Post by fortyofforty » Thu Mar 26, 2020 6:39 pm

MiloMoney wrote:
Thu Mar 26, 2020 6:04 pm
fortyofforty wrote:
Thu Mar 26, 2020 6:21 am
MiloMoney wrote:
Thu Mar 26, 2020 2:36 am
Image
Key Takeaways
  • Get back into a targeted retirement.
    Invest and save like a madman and let compound interest do the heavy lifting.
    Use the time that passive investing gives to hone my trade and earn more money to invest more.
    Use the time that passive investing gives to live a rich and happy life.
Random Questions
  • I am reaching the age where credit cards are coming. Should I stay away from them? Revolving debt scares me.
Thank you again to everyone!
Credit cards are a tool. If you can pay off the balance every month, and collect some reward (e.g. cash back, airline miles, discounts for things you need to buy) then they can be great. If you can't be disciplined and pay off the balance, they are a dangerous path to go down. Once you carry a balance, interest is charged on everything else you buy until the entire balance is paid off, and even then there can be a lag of a month or two. OTOH, debit cards pull money right out of your bank account, which is not appealing to me. When you purchase something with a credit card, you sometimes get an extended warranty and you also get protection in case the seller does not provide the promised item, both of which can be valuable. Again, like fire, credit cards are a tool that, when used wisely, are very valuable; when used foolishly, they can burn you.
Dave Ramsey is a monster for pushing high fee mutual funds and saying only liberals care about fees. I do think he right about paying with cash. The amount of organization required with credit cards seems high.
Everyone has a perspective, everyone has biases and blind spots. Even Jack Bogle is faulted for not favoring international stocks. What you need to do is take the best advice from numerous sources and make your own way. Ramsey pushes people to pay down debt, and for many Americans, debt is the most destructive force around. I am not sure what mutual funds Ramsey is advocating. Just know that total stock, total international stock, total bond, and maybe total international bond, are really the epitome of investing success. All else is gambling to some degree. Take a look at LifeStrategy funds. I like LS Growth, but others prefer more conservative choices.

Remember, Bruce Lee said, “Absorb what is useful, discard what is useless and add what is specifically your own.” You'll find your own path.

User avatar
Sandtrap
Posts: 10979
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: I am 16, Bogleheads help me be rich one day

Post by Sandtrap » Thu Mar 26, 2020 6:46 pm

MiloMoney wrote:
Thu Mar 26, 2020 6:22 pm
Sandtrap wrote:
Thu Mar 26, 2020 11:29 am
tibbitts wrote:
Thu Mar 26, 2020 11:15 am
It seems like half the supposed-Bogleheads who've been posting lately don't believe any of us will survive Covid-19, so maybe just enjoy yourself while you're still alive.

Seriously though you're overthinking this. Having a Roth is nice, especially if somebody will be matching ((or just plain making) your contributions, which seems to happen for many younger people here. Keep it all in a target fund or total market fund. Nobody knows where our QQQ idea came from but I suppose if you want... whatever. Just pick one thing and stick with it.

For taxable put everything into a bank or MM account of your choice. The rate doesn't matter at the amounts you have, but if you want to choose one with relatively high rates. Just don't waste time moving funds around monthly for .1%. You say you have no expenses but you do - someone else is just paying them. Some day they won't and you may have to use your savings.

What will matter is education and eventually employment and spending less than you make, not minor differences in how you invest.
+1
Well said.
Wise advice.

At age 16, a Masters Degree in Engineering or Computer Science, etc, seems like a long way away and an extreme amount of effort that might not be exciting. But, educational levels and achievements like have lifetime earning's and career benefits that are immeasurable. Not everyone can do it. Hard work and perseverance for that long is not in everyone's mindset. Is it in yours?

j :happy
Graduate school seems like a lot of debt. I'm not sure I am up for that.
Scholarships
Subsidies
Military subsidies, GI Bill
Etc

Lot's of pathways.

Vision. .. Goals. . . Dream Big. .
Improvise. . Adapt. . .Overcome.

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

RomeoMustDie
Posts: 160
Joined: Sat Mar 14, 2020 6:07 pm

Re: I am 16, Bogleheads help me be rich one day

Post by RomeoMustDie » Thu Mar 26, 2020 6:55 pm

MiloMoney wrote:
Thu Mar 19, 2020 12:13 am
I am 16 and last year made $700 in income as a parking lot attendant as well as earning $30 a week dog walking. I am a saver and stash or invest around 80% of my income.

Emergency funds: I do not currently have expenses but have $1,100 in the bank.

Debt: None

Tax Filing Status: Single

Tax Rate: Not Applicable /b]

State of Residence: Minnesota

Age: 16

Desired Asset allocation: Whatever makes me the most money

Please provide a hint as to the size of your current total portfolio (as in high four-figures, mid five-figures, low six-figures, etc.) What might be appropriate for a very large portfolio might not be appropriate for a new investor.


I will be transparent here, no need in making you guess. I have $1,800 in my Vanguard Roth IRA and $40 in a Robinhood brokerage.

Current retirement assets

Taxable
0% cash (for investing – do not include emergency funds)
17.38% Global X Nigeria ETF (NGE) (0.89% Expense Ratio)
42.20% Stag Industrial (STAG)
7.83% Urban One (UONE)
0.07% Hexindai (HX)
8.27% A.P Moller Maersk (AMKBY)
1.71% Canntrust (CTST)
16.41% Waitr Holdings (WTRH)
0.58% Globalstar (GSAT)
1.83% Inuvo (INUV)
2.65% Chanticleer Holdings (BURG)

Roth IRA at Vanguard
100% PowerShares QQQ Trust, Series 1 (QQQ)

Contributions

New annual Contributions
$2,102.00 his IRA/Roth IRA 2019
$107.33 his IRA/Roth IRA 2020



Questions:
1. I moved my money from my a Vanguard Targeted Retirement to QQQ is this right? I heard that I should be more aggressive.

2. I am in a US Bank Star Savers club, I am restricted to six withdrawals a month and only get 0.005% interest is this bad? I think it is terrible. I want to change to the Sallie Mae High Yield Savings 1.4% APY is this a good idea? Should I do a money market?

3. How do I budget?


There are youtubers younger than you who are already millionaires. :D

For portfolios I would suggest 55/45 UPRO and TMF since you don't have a lot of money but you have lots of time to compound. You won't miss the :moneybag either way. You can swing for the fences.

Topic Author
MiloMoney
Posts: 49
Joined: Wed Mar 18, 2020 11:37 pm

Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 7:00 pm

RomeoMustDie wrote:
Thu Mar 26, 2020 6:55 pm
MiloMoney wrote:
Thu Mar 19, 2020 12:13 am
I am 16 and last year made $700 in income as a parking lot attendant as well as earning $30 a week dog walking. I am a saver and stash or invest around 80% of my income.

Emergency funds: I do not currently have expenses but have $1,100 in the bank.

Debt: None

Tax Filing Status: Single

Tax Rate: Not Applicable /b]

State of Residence: Minnesota

Age: 16

Desired Asset allocation: Whatever makes me the most money

Please provide a hint as to the size of your current total portfolio (as in high four-figures, mid five-figures, low six-figures, etc.) What might be appropriate for a very large portfolio might not be appropriate for a new investor.


I will be transparent here, no need in making you guess. I have $1,800 in my Vanguard Roth IRA and $40 in a Robinhood brokerage.

Current retirement assets

Taxable
0% cash (for investing – do not include emergency funds)
17.38% Global X Nigeria ETF (NGE) (0.89% Expense Ratio)
42.20% Stag Industrial (STAG)
7.83% Urban One (UONE)
0.07% Hexindai (HX)
8.27% A.P Moller Maersk (AMKBY)
1.71% Canntrust (CTST)
16.41% Waitr Holdings (WTRH)
0.58% Globalstar (GSAT)
1.83% Inuvo (INUV)
2.65% Chanticleer Holdings (BURG)

Roth IRA at Vanguard
100% PowerShares QQQ Trust, Series 1 (QQQ)

Contributions

New annual Contributions
$2,102.00 his IRA/Roth IRA 2019
$107.33 his IRA/Roth IRA 2020



Questions:
1. I moved my money from my a Vanguard Targeted Retirement to QQQ is this right? I heard that I should be more aggressive.

2. I am in a US Bank Star Savers club, I am restricted to six withdrawals a month and only get 0.005% interest is this bad? I think it is terrible. I want to change to the Sallie Mae High Yield Savings 1.4% APY is this a good idea? Should I do a money market?

3. How do I budget?


There are youtubers younger than you who are already millionaires. :D

For portfolios I would suggest 55/45 UPRO and TMF since you don't have a lot of money but you have lots of time to compound. You won't miss the :moneybag either way. You can swing for the fences.


I heard that I should stay away from leverage.

oldfort
Posts: 1002
Joined: Mon Mar 02, 2020 8:45 pm

Re: I am 16, Bogleheads help me be rich one day

Post by oldfort » Thu Mar 26, 2020 7:04 pm

Sandtrap wrote:
Thu Mar 26, 2020 6:46 pm
MiloMoney wrote:
Thu Mar 26, 2020 6:22 pm
Sandtrap wrote:
Thu Mar 26, 2020 11:29 am
tibbitts wrote:
Thu Mar 26, 2020 11:15 am
It seems like half the supposed-Bogleheads who've been posting lately don't believe any of us will survive Covid-19, so maybe just enjoy yourself while you're still alive.

Seriously though you're overthinking this. Having a Roth is nice, especially if somebody will be matching ((or just plain making) your contributions, which seems to happen for many younger people here. Keep it all in a target fund or total market fund. Nobody knows where our QQQ idea came from but I suppose if you want... whatever. Just pick one thing and stick with it.

For taxable put everything into a bank or MM account of your choice. The rate doesn't matter at the amounts you have, but if you want to choose one with relatively high rates. Just don't waste time moving funds around monthly for .1%. You say you have no expenses but you do - someone else is just paying them. Some day they won't and you may have to use your savings.

What will matter is education and eventually employment and spending less than you make, not minor differences in how you invest.
+1
Well said.
Wise advice.

At age 16, a Masters Degree in Engineering or Computer Science, etc, seems like a long way away and an extreme amount of effort that might not be exciting. But, educational levels and achievements like have lifetime earning's and career benefits that are immeasurable. Not everyone can do it. Hard work and perseverance for that long is not in everyone's mindset. Is it in yours?

j :happy
Graduate school seems like a lot of debt. I'm not sure I am up for that.
Scholarships
Subsidies
Military subsidies, GI Bill
Etc

Lot's of pathways.

Vision. .. Goals. . . Dream Big. .
Improvise. . Adapt. . .Overcome.

j :happy
If the OP wants to get rich, joining the military isn't the way to go. If the OP does ROTC for undergrad, they will owe at least four years active duty and another four years in the inactive ready reserve. To make the situation worse, since it's unlikely the OP will do any engineering or computer science work on active duty, he won't be competitive for an engineering job when he gets out.

RomeoMustDie
Posts: 160
Joined: Sat Mar 14, 2020 6:07 pm

Re: I am 16, Bogleheads help me be rich one day

Post by RomeoMustDie » Thu Mar 26, 2020 7:05 pm

MiloMoney wrote:
Thu Mar 26, 2020 7:00 pm
RomeoMustDie wrote:
Thu Mar 26, 2020 6:55 pm
MiloMoney wrote:
Thu Mar 19, 2020 12:13 am
I am 16 and last year made $700 in income as a parking lot attendant as well as earning $30 a week dog walking. I am a saver and stash or invest around 80% of my income.

Emergency funds: I do not currently have expenses but have $1,100 in the bank.

Debt: None

Tax Filing Status: Single

Tax Rate: Not Applicable /b]

State of Residence: Minnesota

Age: 16

Desired Asset allocation: Whatever makes me the most money

Please provide a hint as to the size of your current total portfolio (as in high four-figures, mid five-figures, low six-figures, etc.) What might be appropriate for a very large portfolio might not be appropriate for a new investor.


I will be transparent here, no need in making you guess. I have $1,800 in my Vanguard Roth IRA and $40 in a Robinhood brokerage.

Current retirement assets

Taxable
0% cash (for investing – do not include emergency funds)
17.38% Global X Nigeria ETF (NGE) (0.89% Expense Ratio)
42.20% Stag Industrial (STAG)
7.83% Urban One (UONE)
0.07% Hexindai (HX)
8.27% A.P Moller Maersk (AMKBY)
1.71% Canntrust (CTST)
16.41% Waitr Holdings (WTRH)
0.58% Globalstar (GSAT)
1.83% Inuvo (INUV)
2.65% Chanticleer Holdings (BURG)

Roth IRA at Vanguard
100% PowerShares QQQ Trust, Series 1 (QQQ)

Contributions

New annual Contributions
$2,102.00 his IRA/Roth IRA 2019
$107.33 his IRA/Roth IRA 2020



Questions:
1. I moved my money from my a Vanguard Targeted Retirement to QQQ is this right? I heard that I should be more aggressive.

2. I am in a US Bank Star Savers club, I am restricted to six withdrawals a month and only get 0.005% interest is this bad? I think it is terrible. I want to change to the Sallie Mae High Yield Savings 1.4% APY is this a good idea? Should I do a money market?

3. How do I budget?


There are youtubers younger than you who are already millionaires. :D

For portfolios I would suggest 55/45 UPRO and TMF since you don't have a lot of money but you have lots of time to compound. You won't miss the :moneybag either way. You can swing for the fences.


I heard that I should stay away from leverage.


Research leveraged ETF's it's a bit different.

MindBogler
Posts: 989
Joined: Wed Apr 17, 2013 12:05 pm

Re: I am 16, Bogleheads help me be rich one day

Post by MindBogler » Thu Mar 26, 2020 7:14 pm

MiloMoney wrote:
Thu Mar 26, 2020 6:16 pm
Some if I am understanding this right with compound interest the secret is just time?
That's it! Compound interest is the secret and the most important inputs you can control are: savings rate and time.

User avatar
dratkinson
Posts: 4934
Joined: Thu Jul 26, 2007 6:23 pm
Location: Centennial CO

Re: Key Takeaways

Post by dratkinson » Thu Mar 26, 2020 7:46 pm

fortyofforty wrote:
Thu Mar 26, 2020 6:21 am
MiloMoney wrote:
Thu Mar 26, 2020 2:36 am
Random Questions
  • I am reaching the age where credit cards are coming. Should I stay away from them? Revolving debt scares me.
Credit cards are a tool. If you can pay off the balance every month, and collect some reward (e.g. cash back, airline miles, discounts for things you need to buy) then they can be great. If you can't be disciplined and pay off the balance, they are a dangerous path to go down. Once you carry a balance, interest is charged on everything else you buy until the entire balance is paid off, and even then there can be a lag of a month or two. OTOH, debit cards pull money right out of your bank account, which is not appealing to me. When you purchase something with a credit card, you sometimes get an extended warranty and you also get protection in case the seller does not provide the promised item, both of which can be valuable. Again, like fire, credit cards are a tool that, when used wisely, are very valuable; when used foolishly, they can burn you.
Credit cards.

+1. If you pay them off every month, then CCs are a useful tool. They can even magically increase the interest you earn on your money kept in low-interest bank accounts. How?

Search: http://www.google.com/search?q=ABP+by+C ... rg%2Fforum

File this idea away until you are out on your own and earning your own living.

If your parents are responsible with CC use, then can pass it on to them.


Disclosure. I felt guilty the first time I used a CC to buy groceries. But I got over it when I cashed my first CC cashback rewards check. It was then much easier to put all of my monthly bills on ABP paid by CC.

CCs are also the first item in my first-tier EFs.


Sidebar. During this health crisis, my grocery store is no longer accepting cash---CCs only.



Simplicity and convenience. Notice, if the ABP by CC techniques gets you more return on your money kept in low-interest bank/CU accounts, then you’ll feel less need to chase teaser rates. This will help to keep your financial life simple.

This means your primary consideration in selecting a financial home then becomes the convenience of its other features (free checking, free mailed* statements and tax documents, convenient B&M locations---in order, my primary convenience features sought.).


* Sidebar. Some buy US Savings Bonds. They can only be bought as electronic bonds, from TD (Treasury Direct). This is an online-only account. Nothing is conducted by mail, or by phone. You must login to buy. You must login to get your monthly account value. You must login to sell. You must remember to login at tax time and get your 1099INT on your prior year sales. The IRS requires that you remember to redeem your savings bonds when they mature (20-30years). There are many memory items, and TD does nothing to help us remember.

This is a problem for older folks experiencing old age mental decline, and for their heirs---easier to forget accounts with no paper trail.

Mailed statements and tax documents make it harder to forget accounts. I will no longer open an account that doesn't have free mailed statements. I’d close an account that removed free mailed statements.



Edit. Major typos.
Last edited by dratkinson on Fri Mar 27, 2020 2:41 am, edited 1 time in total.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.

Rich11111
Posts: 16
Joined: Tue Aug 19, 2014 9:02 pm

Re: I am 16, Bogleheads help me be rich one day

Post by Rich11111 » Thu Mar 26, 2020 8:03 pm

I was recently asked by a millennial what my best investment has been. That was a no brainer. I responded that it was in myself. I have had a good return in my investment(college) to the point that I work 2 weekends a month since age 55. I've offered to fund his college as I see it giving higher returns than the market if done correctly. Looking at his expression I'm sure he thinking about wall street. I then gave him the Boglehead approach which would be step 2.

If you plan on going to use present money to spend on education after high school I would not be stock index heavy but more a conservative approach.

The above was not reviewed with gram marly.
Last edited by Rich11111 on Thu Mar 26, 2020 8:12 pm, edited 1 time in total.

fwellimort
Posts: 390
Joined: Tue Feb 12, 2019 9:41 am

Re: I am 16, Bogleheads help me be rich one day

Post by fwellimort » Thu Mar 26, 2020 8:11 pm

Leveraged funds are an if-fy topic in Bogleheads.

I do not recommend you to 'leverage' this early in your career when you don't understand the risks.
Especially playing around with 3x. That's a lot of speculation.
Yes, there is generally some 'ideal' leverage rate if fees + borrowing are low enough (and decay is near non-existant) but they have generally been 1.2~2x (with recent research papers recommending about 1.4x).
Not 3x.
And then there's tax inefficiencies with leverages.

Leverages are like dynamites. 9 out of 10 times they work stupidly well.
But when they don't work, they just explode on you.
I don't recommend it until you fully understand its risk. Especially at 3x. That's just a horrible advice for someone at his age.
Maybe < 2x I can see on a tax advantaged space but there's never any guarantees with leverage and there's a good reason most Bogleheaders don't use leveraged funds.
Now, leverages are used by many here (through house mortgage) but leveraged funds are different from leveraging your house.

That said, leveraged funds tend to be quite popular to many 'new' Bogleheaders and not popular at all with the 'more experienced' Bogleheaders.
Graduate school seems like a lot of debt. I'm not sure I am up for that.
Graduate school isn't necessary. Get good grades at school. And a good SAT or ACT score. Do as much APs as you can.
Get into a school through some merit or need based scholarship and get a degree that makes you employable or go into the trades and learn a marketable trade (but be willing to study outside yourself then to make your future self more employable).
Don't take loans but if you have to, take as minimal as possible.
Also, do keep in mind that you don't go to school necessarily for the education. You go to school for the piece of paper that will enable you to get the interviews necessary to start your career.

Anyways, most people buying leveraged funds here don't fully understand the risks behind it. They just look at the 'number' without doing any research. There's a good reason why plenty of people with extensive knowledge in stochastics aren't leveraging around the world.
I'm actually heavily disappointed that a Bogleheader would recommend such to a 16 year old. Not that I am against leverages (I am for it) but the sheer fact one is recommending in this thread ... sigh.

And there's nothing wrong with credit cards. If used properly, they are great vehicles. I do though don't recommend them until you are out of high school (they don't really have any benefits early on).

Thesaints
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Re: I am 16, Bogleheads help me be rich one day

Post by Thesaints » Thu Mar 26, 2020 8:20 pm

MiloMoney wrote:
Thu Mar 26, 2020 6:02 pm
I will keep that in mind. The idea of graduate school is not very attractive to me.
Trust your luck, then.

BTW "the magic of compounding" works both ways: if you bother doing the calculation you'll see that avocado on a toast today is eventually gonna cost you $15,000.

Topic Author
MiloMoney
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Re: I am 16, Bogleheads help me be rich one day

Post by MiloMoney » Thu Mar 26, 2020 9:44 pm

First off, I want to thank everyone who dispensed time out of there day to advise me. Bogleheads is one of the kinder internet forums I have visited. I am 16 and aggressive in the allocation of my portfolio after comparing hypothetical growth off:
  • Vanguard Target 2065
    QQQ
    S&P 500
    Total Stock Market
It’s not a competition, and I am going with what Jack would do, VTSMX is for me. When I hit 40 or so, I will rebalance, but I feel confident in this and the simplicity of it. Let me know your thoughts, and I would love more book suggestions. In the coming weeks as my schedule from work opens up, I will respond to each post more.

Thank you again!

In appreciation, Milo.
Last edited by MiloMoney on Thu Mar 26, 2020 9:53 pm, edited 1 time in total.

RomeoMustDie
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Re: I am 16, Bogleheads help me be rich one day

Post by RomeoMustDie » Thu Mar 26, 2020 9:50 pm

fwellimort wrote:
Thu Mar 26, 2020 8:11 pm
Leveraged funds are an if-fy topic in Bogleheads.

I do not recommend you to 'leverage' this early in your career when you don't understand the risks.
Especially playing around with 3x. That's a lot of speculation.
Yes, there is generally some 'ideal' leverage rate if fees + borrowing are low enough (and decay is near non-existant) but they have generally been 1.2~2x (with recent research papers recommending about 1.4x).
Not 3x.
And then there's tax inefficiencies with leverages.

Leverages are like dynamites. 9 out of 10 times they work stupidly well.
But when they don't work, they just explode on you.
I don't recommend it until you fully understand its risk. Especially at 3x. That's just a horrible advice for someone at his age.
Maybe < 2x I can see on a tax advantaged space but there's never any guarantees with leverage and there's a good reason most Bogleheaders don't use leveraged funds.
Now, leverages are used by many here (through house mortgage) but leveraged funds are different from leveraging your house.

That said, leveraged funds tend to be quite popular to many 'new' Bogleheaders and not popular at all with the 'more experienced' Bogleheaders.
Graduate school seems like a lot of debt. I'm not sure I am up for that.
Graduate school isn't necessary. Get good grades at school. And a good SAT or ACT score. Do as much APs as you can.
Get into a school through some merit or need based scholarship and get a degree that makes you employable or go into the trades and learn a marketable trade (but be willing to study outside yourself then to make your future self more employable).
Don't take loans but if you have to, take as minimal as possible.
Also, do keep in mind that you don't go to school necessarily for the education. You go to school for the piece of paper that will enable you to get the interviews necessary to start your career.

Anyways, most people buying leveraged funds here don't fully understand the risks behind it. They just look at the 'number' without doing any research. There's a good reason why plenty of people with extensive knowledge in stochastics aren't leveraging around the world.
I'm actually heavily disappointed that a Bogleheader would recommend such to a 16 year old. Not that I am against leverages (I am for it) but the sheer fact one is recommending in this thread ... sigh.

And there's nothing wrong with credit cards. If used properly, they are great vehicles. I do though don't recommend them until you are out of high school (they don't really have any benefits early on).
No risk no reward. :twisted:

finite_difference
Posts: 1784
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Re: I am 16, Bogleheads help me be rich one day

Post by finite_difference » Thu Mar 26, 2020 9:56 pm

MiloMoney wrote:
Thu Mar 26, 2020 9:44 pm
First off, I want to thank everyone who dispensed time out of there day to advise me. Bogleheads is one of the kinder internet forums I have visited. I am 16 and aggressive in the allocation of my portfolio after comparing hypothetical growth off:
  • Vanguard Target 2065
    QQQ
    S&P 500
    Total Stock Market
It’s not a competition, and I am going with what Jack would do, VTSMX is for me. When I hit 40 or so, I will rebalance, but I feel confident in this and the simplicity of it. Let me know your thoughts, and I would love more book suggestions. In the coming weeks as my schedule from work opens up, I will respond to each post more.

Thank you again!

In appreciation, Milo.
Great choice. The more I think about it, the more I like VTSMX (VTSAX once $3k minimum is met.)

Although I also like the simplicity of VTWAX (Vanguard Total World.)

As others have said, continue to focus on improving yourself, sock away as much as you can, and by 40 you may already be financially independent. If not, I’d wager you’d be well on your way.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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Cubicle
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Re: I am 16, Bogleheads help me be rich one day

Post by Cubicle » Thu Mar 26, 2020 10:02 pm

Happy to see such a young person take a high level of interest in their financial future. By starting now, you will have to actively try not to do well in the long term. That doesn't mean slack off, but it does mean you are way ahead of the game. Don't forget to enjoy the ride. Don't feel pressure if you ever did or ever do.

One of the more powerful things for me with personal finance was/is to do a lot of reading. This forum is more than enough if you follow it regularly. Because you will see threads about people saying they figured out the market, then others disagreeing with them. You will see people write about the "dumb move" they just made. And then understand why they did what they did, & why it wasn't a good decision.

You will see esoteric theoretical investing posts, which will confuse the heck out of you. And that's okay because proper investing (not gambling) is not difficult. It's actually boring. "Just keep buying."

And practical threads about how to save money buying a car. Buying a house. The bi-monthly water heater thread (I feel like the board is actually overdue for one).

Pick up those crumbs. After a while, you'll recall things you never thought you needed. And will be more knowledgeable than 99.99% of people your age, allowing you to make sound financial choices.

✓✓✓
"Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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Taylor Larimore
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Re: I am 16, Bogleheads help me be rich one day

Post by Taylor Larimore » Fri Mar 27, 2020 10:48 am

Milo wrote: I am going with what Jack would do, VTSMX is for me."
Milo:

I am confident that you made a wise decision. Congratulations!

Best Wishes
Taylor
Jack Bogle's Words of Wisdom: "My preferred index fund happens to be the total stock market which includes large, medium, and small stocks."
"Simplicity is the master key to financial success." -- Jack Bogle

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Quirkz
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Re: I am 16, Bogleheads help me be rich one day

Post by Quirkz » Fri Mar 27, 2020 12:16 pm

MiloMoney wrote:
Thu Mar 26, 2020 6:24 pm
You have great advice but a terrifying avatar.
Hah. I've got a soft spot for Pinky and the Brain, one of the funniest cartoon bits of the 90's. But maybe it's not a good overlap with serious financial discussions.

tindel
Posts: 163
Joined: Sun Nov 12, 2017 10:06 am

Re: I am 16, Bogleheads help me be rich one day

Post by tindel » Fri Mar 27, 2020 12:44 pm

MiloMoney wrote:
Thu Mar 26, 2020 6:11 pm
What is the difference between a money market and a high yield savings?
10 basis points and check writing ability.

rustymutt
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Re: I am 16, Bogleheads help me be rich one day

Post by rustymutt » Fri Mar 27, 2020 1:24 pm

MiloMoney wrote:
Thu Mar 26, 2020 6:07 pm
rustymutt wrote:
Thu Mar 26, 2020 8:12 am
OK, Get a college education, and go to work daily, on time, and save as much as possible in all ways. Roth, 401K, any way to save.
And if you do that for 30 years, you'll wake up 1 am and say to yourself, "wow I'm a millionaire". But nothing changes then because you have learned to live below your means, and are quite content with what you have. Anyone can do this, even without a college degree, but it's harder to find the dollars without a degree. It's not a secret that in the US anyone can have wealth. But lazy people not so much. Good luck. :moneybag
I like that. My fear is becoming like my grandpa. He was a poor immigrant and came to the US, saved all his money and invested in CDs and annuities. He can't spend money, it pains him.
I bet he worked his ass off and never belly ached about it. He was pride to work, serve others. Just my guess.
Even educators need education. And some can be hard headed to the point of needing time out.

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