High income individual, horrible at investing. [US citizen living in Europe]

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Topic Author
CuriousMonkey123
Posts: 9
Joined: Wed Aug 03, 2016 11:09 am

High income individual, horrible at investing. [US citizen living in Europe]

Post by CuriousMonkey123 » Wed Nov 06, 2019 2:29 am

Hi guys,

I'm currently a high income individual. My net income monthly is close to 20k, additionally I have a few bigger bonus at the end of year that could increase my total net about another 40%. The problem is this I've spent most of my life squandering my money on many stupid things. Currently I own:

1. Apartment in a big american city
2. I have about 50k in 401k
3. I have 20k in an IRA
4. About 70k in liquid cash
5. I'm late 30's
6. Have no debt
7. and I live in an European city.
8. My monthly cost are fairly lower but soon will be about 2-3k a month.
9. I spend "only" about 2-4 so I have a lot of liquid cash left every month.

So what am I suppose to do now? I'm looking for ways to invest more money into things and I've hit a blind spot. I've tried signing up for 'comission free trading apps" such as Robinhood / Acorns. But the issue is since I don't live in America (but I'm a citizen) I can't use those apparently. I'm setting up a Schwab trading account so I can at least use their auto-invest feature.

Any guidance would be highly appreciated. I don't have any specific goals but i do plan to have 2 kids in the next 2-3 years and would like to build as much wealth as possible.

Any advice on allocation split, strategies, services, or any direction would be great.
Last edited by CuriousMonkey123 on Wed Nov 06, 2019 3:10 am, edited 1 time in total.

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

Re: High income individual, horrible at investing.

Post by Momus » Wed Nov 06, 2019 2:31 am

1. Cut down your expenses - live below your means
2. Start investing in your retirement accounts - max it out to index fund
3. Dump any left over to more index funds
4. Profit!!!

Topic Author
CuriousMonkey123
Posts: 9
Joined: Wed Aug 03, 2016 11:09 am

Re: High income individual, horrible at investing.

Post by CuriousMonkey123 » Wed Nov 06, 2019 3:22 am

I don't' believe americans not living in america can invest in index funds.

ivk5
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Re: High income individual, horrible at investing.

Post by ivk5 » Wed Nov 06, 2019 3:46 am

CuriousMonkey123 wrote:
Wed Nov 06, 2019 3:22 am
I don't' believe americans not living in america can invest in index funds.
If you have access to a US brokerage account, you can invest freely in US-domiciled mutual funds and ETFs without issue. (I do this as a US citizen resident in a European country myself.) In fact, this is by far your best option for investing in my opinion, as it’s the only way I know of to invest passively (index funds) while threading the needle between US PFIC and EU PRIIPS constraints. Do everything in your power to stay on good terms with your US brokerage(s), since you’ll likely find it difficult or impossible to open such an account while not residing in the US.

For more on the topic of traps for US citizens living in other countries, see TedSwippet’s excellent draft wiki page here.

lazyday
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Re: High income individual, horrible at investing.

Post by lazyday » Wed Nov 06, 2019 6:28 am

Just thinking of allocations since I'm not familiar with your tax situation:

You could allocate a portion to risky assets and a portion to safe assets, such as 60% and 40%.

The risky assets could include the apartment and stocks. The simplest way to own stocks might be to use just one fund: Vanguard Total World Stock Index Fund. Keeping it simple can help to avoid mistakes such as performance chasing or taking uncompensated risks.

For the safe assets, many people suggest the Vanguard Total Bond Market Index Fund. If keeping it simple helps you to “stay the course” then either that fund or Vanguard Total World Bond might be a good choice. Though in my opinion, it’s less important to keep your safe assets simple than your risky assets. You might instead consider owning muni bonds, CDs, I bonds, TIPS, and/or nominal Treasuries. For example, in Unconventional Success, David Swensen suggests splitting your fixed income 50/50 between TIPS and nominal Treasuries.

There are Vanguard mutual funds or ETFs for most of the above assets.

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JoeRetire
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Re: High income individual, horrible at investing.

Post by JoeRetire » Wed Nov 06, 2019 6:33 am

CuriousMonkey123 wrote:
Wed Nov 06, 2019 2:29 am
I'm currently a high income individual. My net income monthly is close to 20k, additionally I have a few bigger bonus at the end of year that could increase my total net about another 40%. The problem is this I've spent most of my life squandering my money on many stupid things.

So what am I suppose to do now? I'm looking for ways to invest more money into things and I've hit a blind spot. I've tried signing up for 'comission free trading apps" such as Robinhood / Acorns. But the issue is since I don't live in America (but I'm a citizen) I can't use those apparently. I'm setting up a Schwab trading account so I can at least use their auto-invest feature.

Any guidance would be highly appreciated. I don't have any specific goals but i do plan to have 2 kids in the next 2-3 years and would like to build as much wealth as possible.
You should be working with a fee-only fiduciary financial adviser.

They could help you determine your financial goals and help you get on a path toward achieving them.
They could also help you curb your money squandering habits.

For you, it would be money well spent - at least until you can learn how to do it yourself going forward.

mary1492
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Re: High income individual, horrible at investing.

Post by mary1492 » Wed Nov 06, 2019 6:36 am

There's no particular need to use Robinhood any longer since Schwab, Fidelity, and most other brokerages have gone to free commissions.

Since you do have a Schwab account, this means you can trade for free. I'd suggest allocating a small, but modest amount of your monthly free cash to put in to (safe) dividend growers and/or ETFs that are not overvalued.

I also think you should consider selling the apartment in the big American city.

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oldcomputerguy
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Re: High income individual, horrible at investing. [US citizen living in Europe]

Post by oldcomputerguy » Wed Nov 06, 2019 7:30 am

This topic is now in the Non-US Investing forum.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

Topic Author
CuriousMonkey123
Posts: 9
Joined: Wed Aug 03, 2016 11:09 am

Re: High income individual, horrible at investing.

Post by CuriousMonkey123 » Thu Nov 07, 2019 5:29 am

JoeRetire wrote:
Wed Nov 06, 2019 6:33 am
CuriousMonkey123 wrote:
Wed Nov 06, 2019 2:29 am
I'm currently a high income individual. My net income monthly is close to 20k, additionally I have a few bigger bonus at the end of year that could increase my total net about another 40%. The problem is this I've spent most of my life squandering my money on many stupid things.

So what am I suppose to do now? I'm looking for ways to invest more money into things and I've hit a blind spot. I've tried signing up for 'comission free trading apps" such as Robinhood / Acorns. But the issue is since I don't live in America (but I'm a citizen) I can't use those apparently. I'm setting up a Schwab trading account so I can at least use their auto-invest feature.

Any guidance would be highly appreciated. I don't have any specific goals but i do plan to have 2 kids in the next 2-3 years and would like to build as much wealth as possible.
You should be working with a fee-only fiduciary financial adviser.

They could help you determine your financial goals and help you get on a path toward achieving them.
They could also help you curb your money squandering habits.

For you, it would be money well spent - at least until you can learn how to do it yourself going forward.
That's great advice thank you so much. Do you know where I could find such a financial adviser?

Topic Author
CuriousMonkey123
Posts: 9
Joined: Wed Aug 03, 2016 11:09 am

Re: High income individual, horrible at investing.

Post by CuriousMonkey123 » Thu Nov 07, 2019 5:30 am

mary1492 wrote:
Wed Nov 06, 2019 6:36 am
There's no particular need to use Robinhood any longer since Schwab, Fidelity, and most other brokerages have gone to free commissions.

Since you do have a Schwab account, this means you can trade for free. I'd suggest allocating a small, but modest amount of your monthly free cash to put in to (safe) dividend growers and/or ETFs that are not overvalued.

I also think you should consider selling the apartment in the big American city.
Can you share your thoughts on why I should sell it? I have about 220k debt on it with a value of about 600k so a lot of equity. The city is one of the healthiest in America in regards to size and revenue.

Topic Author
CuriousMonkey123
Posts: 9
Joined: Wed Aug 03, 2016 11:09 am

Re: High income individual, horrible at investing.

Post by CuriousMonkey123 » Thu Nov 07, 2019 5:32 am

lazyday wrote:
Wed Nov 06, 2019 6:28 am
Just thinking of allocations since I'm not familiar with your tax situation:

You could allocate a portion to risky assets and a portion to safe assets, such as 60% and 40%.

The risky assets could include the apartment and stocks. The simplest way to own stocks might be to use just one fund: Vanguard Total World Stock Index Fund. Keeping it simple can help to avoid mistakes such as performance chasing or taking uncompensated risks.

For the safe assets, many people suggest the Vanguard Total Bond Market Index Fund. If keeping it simple helps you to “stay the course” then either that fund or Vanguard Total World Bond might be a good choice. Though in my opinion, it’s less important to keep your safe assets simple than your risky assets. You might instead consider owning muni bonds, CDs, I bonds, TIPS, and/or nominal Treasuries. For example, in Unconventional Success, David Swensen suggests splitting your fixed income 50/50 between TIPS and nominal Treasuries.

There are Vanguard mutual funds or ETFs for most of the above assets.
I did not know Apartments are considered Risky? That's interesting. So far I've educated myself as deep as I can. My general understanding is this (maybe you can help clarify):

1. Bonds are safe, and safe is good but not all your money.
2. Index funds and ETFs are similar. Better return but more risky (but not super risky)
3. Vanguard offers the above two in different forms. So generally Vanguard is something you can't really go wrong with if you want simplicity.

Am I alone the right line of thinking with that stuff?

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JoeRetire
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Re: High income individual, horrible at investing.

Post by JoeRetire » Thu Nov 07, 2019 6:34 am

CuriousMonkey123 wrote:
Thu Nov 07, 2019 5:29 am
JoeRetire wrote:
Wed Nov 06, 2019 6:33 am
CuriousMonkey123 wrote:
Wed Nov 06, 2019 2:29 am
I'm currently a high income individual. My net income monthly is close to 20k, additionally I have a few bigger bonus at the end of year that could increase my total net about another 40%. The problem is this I've spent most of my life squandering my money on many stupid things.

So what am I suppose to do now? I'm looking for ways to invest more money into things and I've hit a blind spot. I've tried signing up for 'comission free trading apps" such as Robinhood / Acorns. But the issue is since I don't live in America (but I'm a citizen) I can't use those apparently. I'm setting up a Schwab trading account so I can at least use their auto-invest feature.

Any guidance would be highly appreciated. I don't have any specific goals but i do plan to have 2 kids in the next 2-3 years and would like to build as much wealth as possible.
You should be working with a fee-only fiduciary financial adviser.

They could help you determine your financial goals and help you get on a path toward achieving them.
They could also help you curb your money squandering habits.

For you, it would be money well spent - at least until you can learn how to do it yourself going forward.
That's great advice thank you so much. Do you know where I could find such a financial adviser?
You could start your search here: https://www.letsmakeaplan.org/ or your local equivalent.

lazyday
Posts: 3475
Joined: Wed Mar 14, 2007 10:27 pm

Re: High income individual, horrible at investing.

Post by lazyday » Thu Nov 07, 2019 11:25 am

CuriousMonkey123 wrote:
Thu Nov 07, 2019 5:32 am
I did not know Apartments are considered Risky?
If you owned or partly owned many apartments in different locations, then I suppose you might argue that it's less risky than stocks.

I don't know much about real estate, but would guess that owning a single apartment is quite risky because you are subject to the entire real estate market having a downturn, and local downturns, and depending on your insurance etc, issues with your specific unit.
Vanguard is something you can't really go wrong with if you want simplicity.
With Vanguard, it's easier to get it right, and harder to get it wrong. But one could still do a terrible job investing with Vanguard. For example, choosing an investment that looks great because it has done well in recent years, and then abandoning it if it does poorly. Or just making inappropriate choices of which index to invest in.

This question was moved into the non-US section, where you might get better answers about, for example, your tax situation. I don't know much about this, but it seems there are some pitfalls to look out for. The earlier posts might help.

For your basic questions on how to invest, I don't know if many people are in this section to see your post. It might help to read through some of the wiki https://www.bogleheads.org/wiki/Getting_started and ask specific questions here if they relate to local issues like taxes or currency, or elsewhere on this forum if they are general questions not related to where you live. Such as choosing between stocks and bonds.

mary1492
Posts: 34
Joined: Thu Oct 17, 2019 3:02 am

Re: High income individual, horrible at investing.

Post by mary1492 » Thu Nov 07, 2019 5:56 pm

CuriousMonkey123 wrote:
Thu Nov 07, 2019 5:30 am
mary1492 wrote:
Wed Nov 06, 2019 6:36 am
There's no particular need to use Robinhood any longer since Schwab, Fidelity, and most other brokerages have gone to free commissions.

Since you do have a Schwab account, this means you can trade for free. I'd suggest allocating a small, but modest amount of your monthly free cash to put in to (safe) dividend growers and/or ETFs that are not overvalued.

I also think you should consider selling the apartment in the big American city.
Can you share your thoughts on why I should sell it? I have about 220k debt on it with a value of about 600k so a lot of equity. The city is one of the healthiest in America in regards to size and revenue.
We are in a real estate bubble - pretty much an everything bubble at this time.

Your ~$400k equity is money at risk. Real estate has likely already peaked, a year ago. I've seen lots of For Sale signs in every nearby neighborhood and things are just not moving. Sellers are pricing too high, buyers are not wanting to pay top dollar. We may have also hit bottom on mortgage rates. As they head higher, prices are very likely going to drop.

Real estate, like economic cycles, swing between boom and bust. I believe we are at/past the peak of the boom and heading towards the next bust.

I am extremely conservative. I really would not like to be carrying something like a (second) home that I was not living in - an asset with so much equity being tied up. That you have so much equity is really great. Now is the time to sell. That's just my view and what I would do.

Topic Author
CuriousMonkey123
Posts: 9
Joined: Wed Aug 03, 2016 11:09 am

Re: High income individual, horrible at investing.

Post by CuriousMonkey123 » Fri Nov 08, 2019 4:12 am

lazyday wrote:
Thu Nov 07, 2019 11:25 am
CuriousMonkey123 wrote:
Thu Nov 07, 2019 5:32 am
I did not know Apartments are considered Risky?
If you owned or partly owned many apartments in different locations, then I suppose you might argue that it's less risky than stocks.

I don't know much about real estate, but would guess that owning a single apartment is quite risky because you are subject to the entire real estate market having a downturn, and local downturns, and depending on your insurance etc, issues with your specific unit.
Vanguard is something you can't really go wrong with if you want simplicity.
With Vanguard, it's easier to get it right, and harder to get it wrong. But one could still do a terrible job investing with Vanguard. For example, choosing an investment that looks great because it has done well in recent years, and then abandoning it if it does poorly. Or just making inappropriate choices of which index to invest in.

This question was moved into the non-US section, where you might get better answers about, for example, your tax situation. I don't know much about this, but it seems there are some pitfalls to look out for. The earlier posts might help.

For your basic questions on how to invest, I don't know if many people are in this section to see your post. It might help to read through some of the wiki https://www.bogleheads.org/wiki/Getting_started and ask specific questions here if they relate to local issues like taxes or currency, or elsewhere on this forum if they are general questions not related to where you live. Such as choosing between stocks and bonds.
fantastic, thank you for the detailed reply. All is clear now - read through the entire us expat tax thing as. Now going through getting started. Huge Thank You

Topic Author
CuriousMonkey123
Posts: 9
Joined: Wed Aug 03, 2016 11:09 am

Re: High income individual, horrible at investing.

Post by CuriousMonkey123 » Fri Nov 08, 2019 4:12 am

mary1492 wrote:
Thu Nov 07, 2019 5:56 pm
CuriousMonkey123 wrote:
Thu Nov 07, 2019 5:30 am
mary1492 wrote:
Wed Nov 06, 2019 6:36 am
There's no particular need to use Robinhood any longer since Schwab, Fidelity, and most other brokerages have gone to free commissions.

Since you do have a Schwab account, this means you can trade for free. I'd suggest allocating a small, but modest amount of your monthly free cash to put in to (safe) dividend growers and/or ETFs that are not overvalued.

I also think you should consider selling the apartment in the big American city.
Can you share your thoughts on why I should sell it? I have about 220k debt on it with a value of about 600k so a lot of equity. The city is one of the healthiest in America in regards to size and revenue.
We are in a real estate bubble - pretty much an everything bubble at this time.

Your ~$400k equity is money at risk. Real estate has likely already peaked, a year ago. I've seen lots of For Sale signs in every nearby neighborhood and things are just not moving. Sellers are pricing too high, buyers are not wanting to pay top dollar. We may have also hit bottom on mortgage rates. As they head higher, prices are very likely going to drop.
a
Real estate, like economic cycles, swing between boom and bust. I believe we are at/past the peak of the boom and heading towards the next bust.

I am extremely conservative. I really would not like to be carrying something like a (second) home that I was not living in - an asset with so much equity being tied up. That you have so much equity is really great. Now is the time to sell. That's just my view and what I would do.


Clear, thanks again for explaining.

wawoodjr
Posts: 50
Joined: Sun May 10, 2009 9:43 am

Re: High income individual, horrible at investing. [US citizen living in Europe]

Post by wawoodjr » Fri Nov 08, 2019 4:45 am

I agree that you should use Bogleheads.org to help educate yourself on investment basics. But your expat situation is unique. In my opinion Mark Zoril would be an excellent choice for you as an investment advisor. His firm PlanVision charges only $96 a year for advice. He believes in simple low fee index fund investing and best of all his specialty is the investment nuances for expats living abroad. https://planvisionmn.com/

Topic Author
CuriousMonkey123
Posts: 9
Joined: Wed Aug 03, 2016 11:09 am

Re: High income individual, horrible at investing. [US citizen living in Europe]

Post by CuriousMonkey123 » Fri Nov 08, 2019 6:23 am

wawoodjr wrote:
Fri Nov 08, 2019 4:45 am
I agree that you should use Bogleheads.org to help educate yourself on investment basics. But your expat situation is unique. In my opinion Mark Zoril would be an excellent choice for you as an investment advisor. His firm PlanVision charges only $96 a year for advice. He believes in simple low fee index fund investing and best of all his specialty is the investment nuances for expats living abroad. https://planvisionmn.com/
Thanks for this! Exactly what I'm looking for signing up now.

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