Implementing Investment Strategy

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Chase.sail
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Joined: Wed Oct 09, 2019 12:00 pm

Implementing Investment Strategy

Post by Chase.sail » Wed Oct 09, 2019 12:12 pm

Hi, I have recently finished reading the book "Bogleheads’ Guide to Investing." I am a 19 year old college student with a sum of money I am looking to invest to take the best advantage of compound interest. I am obviously looking at a 80% stock and 20% bond portfolio and not sure when to implement it due to the rich market and nonstop talk about "the market crashing soon and the yield curve inversion." Should I wait for a large drop and invest a good portion of it or use a dollar cost averaging method now? Thanks in advance for your help.

magicrat
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Joined: Sat Nov 29, 2014 7:04 pm

Re: Implementing Investment Strategy

Post by magicrat » Wed Oct 09, 2019 12:22 pm

You should develop a plan that makes sense for you and implement it as soon as it is complete. 80/20 is not "obvious", especially if you are already nervous before even investing anything. Read up on the methodology on this site (see the wiki) and develop an investment policy statement. Also read up on market timing (hint: it does not work and you will be worse off if you try to be a market timer).

livesoft
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Re: Implementing Investment Strategy

Post by livesoft » Wed Oct 09, 2019 12:24 pm

"compound interest" is something that goes with a savings account or other guaranteed to pay investment and is NOT associated with investing in risky products such as stocks, ETFs, mutual funds, bonds, and so on.

So it reads like you want to put your money in a savings account or perhaps a money market fund such as Vanguard Prime Money Market fund.

As you think about all this, what is the goal for these investments? Retirement? A vehicle? A home down payment? A wedding? A vacation? Pay off loans? Tuition? And the time frame? 3 months? 2 years? 30 years? ???
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Topic Author
Chase.sail
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Joined: Wed Oct 09, 2019 12:00 pm

Re: Implementing Investment Strategy

Post by Chase.sail » Wed Oct 09, 2019 1:21 pm

Thank you both for responding so quickly. I will work on an investment policy statement as you mentioned. I definitely want to invest this money for a time period of 20-30 years or so in hopes of accumulating enough for a particular boat or rather accumulate a high purchasing power of whatever I desire. I am just trying to be prudent about my money and set aside what I am willing to save and thus invest. In investing this money along with additions each year I would be wanting the best growth rate as I am young and my risk tolerance is high. Despite this, I am just a little unsure of what route I should take whether it be a portfolio of ETF's, stocks, bonds, or some diversification of these.

Country road$
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Joined: Mon Apr 30, 2018 9:24 am

Re: Implementing Investment Strategy

Post by Country road$ » Wed Oct 09, 2019 1:48 pm

I would also recommend developing an investment policy statement. If you are saving for non-retirement goals, you will likely use a taxable or brokerage account (I use vanguard for this). Within this account you can use more conservative funds like the money market funds or more aggressive equity funds. I would suggest using index funds primarily low turn over funds such as VTSAX or VTI (ETF). I would be careful about adding bonds in a taxable as they can cause tax drag. (you should read up on this before you open the fund).

Another option would be to open a roth IRA as your contributions to this can be used without a penalty. There is a limit of $6k for 2019 so you may not be able to contribute all of your funds depending on how much dinero you have.

Congrats on starting early. Continue to read the forum and literature under the suggested reading on the Wiki

cheers

KingRiggs
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Location: Indiana

Re: Implementing Investment Strategy

Post by KingRiggs » Wed Oct 09, 2019 1:55 pm

May I suggest googling “If You Can”, an excellent, short pdf on saving and investing, geared towards younger investors. It might give you a rough framework from which to work.

Congratulations on starting down this path at an early age. You are light-years ahead of many of your peers. Continue to read and learn s as you go along!
Advice = noun | Advise = verb | | Roth, not ROTH

snailderby
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Re: Implementing Investment Strategy

Post by snailderby » Wed Oct 09, 2019 4:53 pm

Welcome to the forum! (1) I would second the advice to pick an asset allocation that you can stick with whether the market crashes or skyrockets tomorrow. You don't have to have the same asset allocation as other investors your age. (2) Many posters here recommend lump sum investing, but if it would make you feel better to dollar cost average, go for it. (3) If you can open a (Roth) IRA, that would be great, but do keep in mind that you cannot contribute more than your "taxable compensation for the year" to a (Roth) IRA.

rossington
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Re: Implementing Investment Strategy

Post by rossington » Wed Oct 09, 2019 5:28 pm

I would open an account with Vanguard (call them for help if you need it). If you have the $3000 minimum put it all in the Prime Money Market Fund and reinvest the dividends. Then do your research. Follow the above suggestions.
Don't time the market.
No matter what you ultimately invest in....make sure you reinvest the dividends to get your compounding.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

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Wiggums
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Re: Implementing Investment Strategy

Post by Wiggums » Wed Oct 09, 2019 6:31 pm

KingRiggs wrote:
Wed Oct 09, 2019 1:55 pm
May I suggest googling “If You Can”, an excellent, short pdf on saving and investing, geared towards younger investors. It might give you a rough framework from which to work.

Congratulations on starting down this path at an early age. You are light-years ahead of many of your peers. Continue to read and learn s as you go along!
The if you can document is hosted here on an investment resource site:
http://www.etf.com/docs/IfYouCan.pdf

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Wiggums
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Re: Implementing Investment Strategy

Post by Wiggums » Wed Oct 09, 2019 6:36 pm

Chase.sail wrote:
Wed Oct 09, 2019 1:21 pm
I definitely want to invest this money for a time period of 20-30 years or so in hopes of accumulating enough for a particular boat or rather accumulate a high purchasing power of whatever I desire.
it sounds like you are talking about a taxable account, since you are looking to access the money prior to retirement. Of course, you can open up an IRA now and then the taxable account later.

MikeG62
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Location: New Jersey

Re: Implementing Investment Strategy

Post by MikeG62 » Thu Oct 10, 2019 7:42 am

Chase.sail wrote:
Wed Oct 09, 2019 12:12 pm
Hi, I have recently finished reading the book "Bogleheads’ Guide to Investing." I am a 19 year old college student with a sum of money I am looking to invest to take the best advantage of compound interest.
I love to read things like this - a young person your age interested in investing. Bravo to you. You will be leaps and bounds ahead of your peers in the future for doing the right things from the beginning. Way to go!
Real Knowledge Comes Only From Experience

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