$100K to Invest - Complete Beginner

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Noob Investor
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$100K to Invest - Complete Beginner

Post by Noob Investor » Mon Jan 13, 2020 12:13 am

Hello, Bogleheads!

Thank you in advance for any help that I receive here!
Just a reminder, I am a beginner so my apologies if I use terms incorrectly.

In Jan 2017, I was about $83,000 in debt ($23k car, $60k student loans).
I have paid down the bad debt, built an emergency fund, and started saving capital to start investing (stocks and RE).

Here are some details of my situation and questions:

Emergency Fund: Yes - 6 Months Expenses

Debt: $47,000 Rental Mortgage - Home Valued at $130,000

Tax Filing Status: Single (but I am engaged so that could change soon)

Tax Rate: 22-24% Federal Tax Rate depending on the year

State of Residence: Ohio

Age: 30

Desired Assets Allocation: 80% Stocks / 20% Bonds

Current Portfolio: Low Five Figures (~20,000k in Roth IRA)

Current Retirement Assets:

Roth IRA at Royal Alliance
3% AMRMX (.610 expense ratio)
10% ANEFX (.770 expense ratio)
80% GWPCX (1.500 expense ratio)
7% SMCWX (1.080 expense ratio)

These accounts also have 5%+ Load and 5%+ Sales Charge.

Contributions:

New Annual Contributions:
  • Maxing out Roth IRA
  • Should have an additional $30,000 - $50,000 to invest if income level stays the same.

Questions:
  • Using the 3 Fund Portfolio approach, I am considering these two funds to start with:
FZROX
FZILX
Are these acceptable?
I see mixed reviews on these accounts with the zero fees, why is that?
  • What fund would you suggest I search in regards to bonds being that I am currently self-employed with no 401k?
  • As a business owner (no employees), would you suggest that I open a solo 401k, SEP IRA, or even both?
  • What is the best type of account to hold bonds in?
  • What is the best strategy to determine asset allocation inside the three different accounts (brokerage, 401k, Roth IRA, SEP, etc)?
  • With $100,000 to invest, should I Dollar Cost Average into the market or send it all in?



I appreciate your time!
Last edited by Noob Investor on Tue Jan 14, 2020 4:57 pm, edited 2 times in total.

annu
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Re: $100K to Invest - Complete Beginner

Post by annu » Mon Jan 13, 2020 12:08 pm

It might be easiest to look up a target date fund, and check the funds being used to make the target fund. I personally have fidelity but created a target date fund using vanguard etf. I picked the 2050 target fund andnoicked corresponding etf for those and used the same %ages.

Stay away from zero cost funds, as those will tie you to vendor.

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ruralavalon
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Re: $100K to Invest - Complete Beginner

Post by ruralavalon » Mon Jan 13, 2020 12:26 pm

Welcome to the forum :) .

It's good to see that you have paid for off your debts, and are interested in very diversified investing using low expense index funds.

Some additional information will be useful. Do you have any employees in your business? if so, how many? About how much (in dollars) do you believe that you might be able to contribute annually to investing? Please see this for other information needed and format: "Asking Portfolio Questions". Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.


Noob Investor wrote:
Mon Jan 13, 2020 12:13 am
Hello, Bogleheads!

Thank you in advance for any help that I receive here!
I have been lurking around the forum for about a week or so and have been doing research on the Three Fund Portfolio after being turned on to this investment strategy by a friend (who is a member of this forum as well).

In Jan 2017, I was about $83,000 in debt ($23k car, $60k student loans).
I worked a lot to pay those bad debts down, to build an emergency fund, and to bank some capital with the goal of investing.
I currently have about $115,000 in the bank and I know that I need to move this into an account that pays more than what my bank currently does :)
I plan to leave $15,000 in the bank right now as an "emergency fund" (or potentially move it into SPAXX) and plan to start investing the other $100,000 as soon as possible.

I have a few questions related to the Three Fund Portfolio.

The two funds that I am considering for stocks are:
FZROX
FZILX

Are these acceptable?
Yes.

But instead I suggest:
Fidelity® Total Market Index (FSKAX) ER 0.015%; and
Fidelity® Total International Index (FTIHX) ER 0.06%

Noob Investor wrote:
Mon Jan 13, 2020 12:13 am
What fund would you suggest I search for in regards to Bonds?
At Fidelity consider Fidelity® US Bond Index (FXNAX) ER 0.025%.

Noob Investor wrote:
Mon Jan 13, 2020 12:13 am
I just turned 30 years old and plan to allocate 25-30% of the portfolio in bonds.
At age 30 I suggest about 20% in bonds or other fixed income investments (like CDs, savings accounts, money market fund). This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation"; and
3) Morningstar (8/20/2019), "The Best Diversifiers for Your Equity Portfolio".



Noob Investor wrote:
Mon Jan 13, 2020 12:13 am
However, through some research on the forum, it seems like the majority of bonds are taxed as capital gains?
Incorrect. Bond funds produce interest dividends, taxed at the higher ordinary income rate.

Bond funds are not very tax-efficient. Ordinarily a bond fund should be placed in a tax-advantaged account, preferably a tax-deferred account like a traditional 401k. Wiki article "Tax-efficient fund placement".


Noob Investor wrote:
Mon Jan 13, 2020 12:13 am
I do have a Roth IRA as well (currently being held by my financial advisor but I am planning on moving it over soon).
Would this be a good account to hold bonds in?
In general prefer to use stock funds in a Roth IRA.


Noob Investor wrote:
Mon Jan 13, 2020 12:13 am
I am self-employed and do not have a 401k so my investments would be in a standard brokerage account.
Is it a good idea to hold bonds in this type of account?

No.

Bond funds are not very tax-efficient. Ordinarily a bond fund should be placed in a tax-advantaged account, preferably a tax-deferred account like a traditional 401k. Wiki article "Tax-efficient fund placement".


Noob Investor wrote:
Mon Jan 13, 2020 12:13 am
Or... I have thought about opening a Solo 401k and possibly a SEP IRA.
Any thoughts on this?
It looks like, with Fidelity, there are no setup fees or annual maintenance fees.
Since you are self-employed you could consider using a SEP IRA, SIMPLE IRA, or individual (solo) 401k. Vanguard, small-business plans,"Compare plans". That link has a nice table comparing the features (like contribution limits, amount of paperwork required, etc.) of the three types of plans.

Do you have any employees in your business? if so, how many? About how much (in dollars) do you believe that you might be able to contribute annually to investing?

Both Fidelity and Schwab also offer the same types of plans. Fidelity "Retirement plans for small businesses ". Schwab, "Small business retirement plans".

The College Investor (12/11/2017), "Comparing The Most Popular Solo 401k Options".

The Bogleheads' wiki has articles on each type of plan. Boglehead's wiki, "SEP IRA". Boglehead's wiki, "SIMPLE IRA". Boglehead's wiki, "Solo 401k Plan".


Noob Investor wrote:
Mon Jan 13, 2020 12:13 am
And lastly, what is the best strategy to determine asset allocation inside the three different accounts (brokerage, 401k, Roth IRA)?
It is often better to coordinate investments across all accounts, in other words treat all accounts together as a single unified portfolio, rather than view each account separately. Select just one or two of the better funds (most diversified + lower expense ratio) in the work-based account (401k, 403b, 457, SIMPLE IRA, TSP etc.), where the choices offered are limited. Then complete the rest of the asset allocation using the nearly unlimited choices available in a taxable account or any IRAs.

It is not necessary to put all elements of the three fund portfolio in each account.

This approach allows for better tax-efficiency if you use taxable account too. Wiki article, "Tax-efficient Fund Placement".

. . . . .

I suggest that you read one or two books on investing. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom". Also take a look at the Boglehead’s wiki, the "getting started" link I give below. A quick education for a beginning investor is Dr. Bernstein's free short on-line book, "If You Can".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
Noob Investor
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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Tue Jan 14, 2020 4:54 pm

Wow! Thank you so much for the reply.
I really appreciate the time and effort that you have put into this.

I am going to start reading the links that you have sent in your post to further educate myself.

I just wanted to let you know that I have edited the initial post in the format requested and added a little more information about my current Roth IRA and a couple of additional questions.



ruralavalon wrote:
Mon Jan 13, 2020 12:26 pm

Do you have any employees in your business? if so, how many? About how much (in dollars) do you believe that you might be able to contribute annually to investing?
No employees.
I should be able to invest $30,000 - $50,000 yearly if income level stays the same.
If I make more, I will invest more and maintain same standard of living (minimal).


ruralavalon wrote:
Mon Jan 13, 2020 12:26 pm
Yes.

But instead I suggest:
Fidelity® Total Market Index (FSKAX) ER 0.015%; and
Fidelity® Total International Index (FTIHX) ER 0.06%
If you don't mind me asking, why do you prefer these compared to Fidelity Zero?
Last edited by Noob Investor on Tue Jan 14, 2020 5:04 pm, edited 1 time in total.

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ruralavalon
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Re: $100K to Invest - Complete Beginner

Post by ruralavalon » Tue Jan 14, 2020 5:03 pm

No employees.
I should be able to invest $30,000 - $50,000 yearly if income level stays the same.
If I make more, I will invest more and maintain same standard of living (minimal).
A individual (solo) 401k has a higher annual contribution limit than the other plans available for the self-employed.

So I suggest that you consider starting an individual (solo) 401k plan at a low cost provider like Vanguard, Fidelity or E*Trade.

Take a look at the plan features at the different providers to determine which plan provider may be best for you. The College Investor (12/11/2017), "Comparing The Most Popular Solo 401k Options".
Last edited by ruralavalon on Tue Jan 14, 2020 5:09 pm, edited 3 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Noob Investor
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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Tue Jan 14, 2020 5:05 pm

ruralavalon wrote:
Tue Jan 14, 2020 5:03 pm
About how much do you believe you may be able to contribute annually to investing?

A individual (solo) 401k has a higher annual contribution limit than the other plans available for the self-employed.
Sorry! Just re-edited the post as I was having trouble with the quotes.

$30,000 - $50,000 if income level remains the same.

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ruralavalon
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Re: $100K to Invest - Complete Beginner

Post by ruralavalon » Tue Jan 14, 2020 5:23 pm

Noob Investor wrote:
Tue Jan 14, 2020 4:54 pm
ruralavalon wrote:
Mon Jan 13, 2020 12:26 pm
Yes.

But instead I suggest:
Fidelity® Total Market Index (FSKAX) ER 0.015%; and
Fidelity® Total International Index (FTIHX) ER 0.06%
If you don't mind me asking, why do you prefer these compared to Fidelity Zero?
The Fidelity ZERO funds can be held only in an account with Fidelity. If you later decide you want to move an account elsewhere then you are stuck. You either must sell the fund or not move the account. With a taxable brokerage account selling in order to move would mean income tax liability assuming the fund has had a gain.

The Fidelity ZERO funds are very new, use unique indexes created just for Fidelity and so have little track record so far.

The Fidelity ZERO International Index Fund does not include small-cap stocks, a fairly minor drawback in my opinion.

The expense ratio difference using the ZERO funds is tiny, compared to other Fidelity Index funds. An expense ratio difference of 0.015% on an investment of $10,000 equals just $1.50 annually.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Razasharpz
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Re: $100K to Invest - Complete Beginner

Post by Razasharpz » Tue Jan 14, 2020 6:27 pm

Those funds only pay out dividends twice a year. Vanguard will pay out 4 times a year.

Also you don't need 20% in bonds at age 30 especially in this bull market. Go something like my sig.
Age 31: | 70% VTSAX | 20% VTIAX | 10% VBTLX

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Noob Investor
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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Wed Jan 15, 2020 2:31 pm

Razasharpz wrote:
Tue Jan 14, 2020 6:27 pm
Those funds only pay out dividends twice a year. Vanguard will pay out 4 times a year.

Also you don't need 20% in bonds at age 30 especially in this bull market. Go something like my sig.
Thank you for the reply!
Yeah, I would like to be a bit more aggressive in general so that could work!

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Noob Investor
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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Wed Jan 15, 2020 2:32 pm

ruralavalon wrote:
Tue Jan 14, 2020 5:23 pm
Noob Investor wrote:
Tue Jan 14, 2020 4:54 pm
ruralavalon wrote:
Mon Jan 13, 2020 12:26 pm
Yes.

But instead I suggest:
Fidelity® Total Market Index (FSKAX) ER 0.015%; and
Fidelity® Total International Index (FTIHX) ER 0.06%
If you don't mind me asking, why do you prefer these compared to Fidelity Zero?
The Fidelity ZERO funds can be held only in an account with Fidelity. If you later decide you want to move an account elsewhere then you are stuck. You either must sell the fund or not move the account. With a taxable brokerage account selling in order to move would mean income tax liability assuming the fund has had a gain.

The Fidelity ZERO funds are very new, use unique indexes created just for Fidelity and so have little track record so far.

The Fidelity ZERO International Index Fund does not include small-cap stocks, a fairly minor drawback in my opinion.

The expense ratio difference using the ZERO funds is tiny, compared to other Fidelity Index funds. An expense ratio difference of 0.015% on an investment of $10,000 equals just $1.50 annually.
Thank you for the insight here.
I was unaware that the funds tied you to the provider.
That makes complete sense... and as you mentioned, the ER on the funds is negligible.

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Noob Investor
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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Wed Jan 15, 2020 2:38 pm

ruralavalon wrote:
Tue Jan 14, 2020 5:03 pm
No employees.
I should be able to invest $30,000 - $50,000 yearly if income level stays the same.
If I make more, I will invest more and maintain same standard of living (minimal).
A individual (solo) 401k has a higher annual contribution limit than the other plans available for the self-employed.

So I suggest that you consider starting an individual (solo) 401k plan at a low cost provider like Vanguard, Fidelity or E*Trade.

Take a look at the plan features at the different providers to determine which plan provider may be best for you. The College Investor (12/11/2017), "Comparing The Most Popular Solo 401k Options".
Awesome!
Thank you for the suggestion.
I will look into that link and get the solo 401k plan started up.

Questions:
  • If I wanted to have some cash on hand for different type of investments (my business, another business, real estate, etc), would you recommend that I park these funds in a standard brokerage account?
  • Should I put all funds into a SPAXX account until I learn more and get the accounts opened?
  • With 100k to put into the market, would you recommend Dollar Cost Averaging in or try to get it all in the beginning?

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ruralavalon
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Re: $100K to Invest - Complete Beginner

Post by ruralavalon » Wed Jan 15, 2020 3:30 pm

Noob Investor wrote:
Wed Jan 15, 2020 2:38 pm
ruralavalon wrote:
Tue Jan 14, 2020 5:03 pm
No employees.
I should be able to invest $30,000 - $50,000 yearly if income level stays the same.
If I make more, I will invest more and maintain same standard of living (minimal).
A individual (solo) 401k has a higher annual contribution limit than the other plans available for the self-employed.

So I suggest that you consider starting an individual (solo) 401k plan at a low cost provider like Vanguard, Fidelity or E*Trade.

Take a look at the plan features at the different providers to determine which plan provider may be best for you. The College Investor (12/11/2017), "Comparing The Most Popular Solo 401k Options".
Awesome!
Thank you for the suggestion.
I will look into that link and get the solo 401k plan started up.

Questions:
  • If I wanted to have some cash on hand for different type of investments (my business, another business, real estate, etc), would you recommend that I park these funds in a standard brokerage account?
About how much cash are you considering?

Fidelity does not offer a higher yield money market fund that you could use in a standard brokerage account.

You could get a better interest rate in a high-yield online savings account. For rates see: www.bankrate.com.


Noob Investor wrote:
Wed Jan 15, 2020 2:38 pm
  • Should I put all funds into a SPAXX account until I learn more and get the accounts opened?
Fidelity® Government Money Market Fund (SPAXX) currently has a SEC Yield = 1.25%.

Fidelity® Money Market Fund (SPRXX) current SEC Yield = 1.50% is probably the best Fidelity choice to temporarily hold cash.

Other possibilities are Fidelity® Short-Term Bond (FSHBX) current SEC Yield = 1.70%, and Fidelity® Limited Term Bond Fund (FJRLX) current SEC Yield = 1.90%.



Noob Investor wrote:
Wed Jan 15, 2020 2:38 pm
  • With 100k to put into the market, would you recommend Dollar Cost Averaging in or try to get it all in the beginning?
Once you have decided on a plan, the accounts to use, and funds to use then I suggest investing it all at once rather than in stages.

When investing a large chunk of money, "all at once" works out better about 2/3 of the time. Please see the Vanguard paper, "Dollar-cost averaging just means taking risk later".

Wiki article, "Dollar-cost averaging". “Lump sum investing will always carries [sic] a higher expected return, because it immediately moves your funds from asset classes with lower expected returns to ones with higher expected returns. Note that higher expected returns do not guarantee that your actual returns will be higher. According to an investopedia article, studies indicate that lump sum investing has produced higher returns 66% of the time”.

Here is another interesting article to read -- "What if you only invested at market peaks?"

The compromise solution is to invest part in a lump sum now, and the rest in stages. For example invest 50% in a lump sum now, and invest the other 50% in stages (like an additional 10% on a predetermined date each month for the next 5 months). Don't needlessly agonize over when the best time may be to invest.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Cautionary Tale
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Re: $100K to Invest - Complete Beginner

Post by Cautionary Tale » Thu Jan 16, 2020 1:29 pm

"Status: Single (but I am engaged so that could change soon)"

Could?

Cold feet?

Hopefully fiance doesn't read BH.

djeayzonne
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Re: $100K to Invest - Complete Beginner

Post by djeayzonne » Thu Jan 16, 2020 1:57 pm

You are young and at the very beginning of your investing career.
You should AT MINIMUM be 100% stock.

You should consider leverage, but maybe not too much because you are self-employed with variable income.

If I had 100k to sitting around and on-track with a plan to max out tax-advantaged space, I would throw it all into M1 with a pie of 50% ITOT or equivalent and 50% NTSX. I would max out the M1 borrow and throw all of that into same pie for 1.35:1 leverage in taxable.

I like and use fidelity for solo 401k, but instead of opening up directly with them, I would use one of the solo 401k services so that you can open a standard brokerage account with fidelity and be free of some of the restrictions. Then you could have level 4 options trading in your 401k account and have a synthetic long position or two of SPY for just a little more leverage in addition to FSKAX and FTIHX (if you want international) as your main staples there.

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Noob Investor
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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Thu Jan 16, 2020 2:14 pm

Cautionary Tale wrote:
Thu Jan 16, 2020 1:29 pm
"Status: Single (but I am engaged so that could change soon)"

Could?

Cold feet?

Hopefully fiance doesn't read BH.
Haha! I meant the Single status could change into Married soon.
We have not set a date as of yet.
No cold feet :)

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ruralavalon
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Re: $100K to Invest - Complete Beginner

Post by ruralavalon » Thu Jan 16, 2020 2:27 pm

Noob Investor wrote:
Wed Jan 15, 2020 2:38 pm
  • Should I put all funds into a SPAXX account until I learn more and get the accounts opened?
In my prior response I forgot another cash-like possibility at Fidelity. Fidelity offers commission free transactions of iShares products.

So you could use iShares Ultra Short-Term Bond ETF (ICSH) current SEC Yield = 2.00% to temporarily hold your money while you figure out what to do and open your accounts.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Thu Jan 16, 2020 2:35 pm

djeayzonne wrote:
Thu Jan 16, 2020 1:57 pm
You are young and at the very beginning of your investing career.
You should AT MINIMUM be 100% stock.

You should consider leverage, but maybe not too much because you are self-employed with variable income.

If I had 100k to sitting around and on-track with a plan to max out tax-advantaged space, I would throw it all into M1 with a pie of 50% ITOT or equivalent and 50% NTSX. I would max out the M1 borrow and throw all of that into same pie for 1.35:1 leverage in taxable.

I like and use fidelity for solo 401k, but instead of opening up directly with them, I would use one of the solo 401k services so that you can open a standard brokerage account with fidelity and be free of some of the restrictions. Then you could have level 4 options trading in your 401k account and have a synthetic long position or two of SPY for just a little more leverage in addition to FSKAX and FTIHX (if you want international) as your main staples there.
Thanks for the comment!
Being that I am very green when it comes to investing, this seems to be a bit over my head at the time.
I am trying hard to nail down the basics first.

Do you have any links you can provide me where I can learn more about what you mentioned above?

I would love to continue expanding my knowledge.

I was considering opening a solo 401k with E-Trade due to the Roth feature they provide.
https://thecollegeinvestor.com/18174/co ... k-options/

And I was planning on doing the rest of my investing with Fidelity.

Is there a reason why you recommended M1?

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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Thu Jan 16, 2020 2:40 pm

ruralavalon wrote:
Thu Jan 16, 2020 2:27 pm
Noob Investor wrote:
Wed Jan 15, 2020 2:38 pm
  • Should I put all funds into a SPAXX account until I learn more and get the accounts opened?
In my prior response I forgot another cash-like possibility at Fidelity. Fidelity offers commission free transactions of iShares products.

So you could use iShares Ultra Short-Term Bond ETF (ICSH) current SEC Yield = 2.00% to temporarily hold your money while you figure out what to do and open your accounts.
Thanks!

I was looking into the Direct Savings account by HSBC which provides a 2% APY.
I was planning on opening that, moving the money in temporarily, and then when my solo 401(k) opens, start to move all money into those accounts and leave my emergency fund with HSBC.

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ruralavalon
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Re: $100K to Invest - Complete Beginner

Post by ruralavalon » Thu Jan 16, 2020 2:42 pm

A 100% stock portfolio is very risky. In my opinion 100% in anything is a bad idea.

A leveraged 100% stock portfolio is extremely risky.

In my opinion E*Trade looks like a good choice, since you want a solo 401k which permits both Roth contributions and incoming rollovers.
Last edited by ruralavalon on Thu Jan 16, 2020 2:46 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: $100K to Invest - Complete Beginner

Post by ruralavalon » Thu Jan 16, 2020 2:45 pm

Noob Investor wrote:
Thu Jan 16, 2020 2:40 pm
ruralavalon wrote:
Thu Jan 16, 2020 2:27 pm
Noob Investor wrote:
Wed Jan 15, 2020 2:38 pm
  • Should I put all funds into a SPAXX account until I learn more and get the accounts opened?
In my prior response I forgot another cash-like possibility at Fidelity. Fidelity offers commission free transactions of iShares products.

So you could use iShares Ultra Short-Term Bond ETF (ICSH) current SEC Yield = 2.00% to temporarily hold your money while you figure out what to do and open your accounts.
Thanks!

I was looking into the Direct Savings account by HSBC which provides a 2% APY.
I was planning on opening that, moving the money in temporarily, and then when my solo 401(k) opens, start to move all money into those accounts and leave my emergency fund with HSBC.
That sounds very reasonable.
Last edited by ruralavalon on Thu Jan 16, 2020 2:47 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Noob Investor
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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Thu Jan 16, 2020 2:46 pm

ruralavalon wrote:
Thu Jan 16, 2020 2:45 pm
Noob Investor wrote:
Thu Jan 16, 2020 2:40 pm
ruralavalon wrote:
Thu Jan 16, 2020 2:27 pm
Noob Investor wrote:
Wed Jan 15, 2020 2:38 pm
  • Should I put all funds into a SPAXX account until I learn more and get the accounts opened?
In my prior response I forgot another cash-like possibility at Fidelity. Fidelity offers commission free transactions of iShares products.

So you could use iShares Ultra Short-Term Bond ETF (ICSH) current SEC Yield = 2.00% to temporarily hold your money while you figure out what to do and open your accounts.
Thanks!

I was looking into the Direct Savings account by HSBC which provides a 2% APY.
I was planning on opening that, moving the money in temporarily, and then when my solo 401(k) opens, start to move all money into those accounts and leave my emergency fund with HSBC.
That sounds reasonable.
Thanks! Glad to know that I am on the right track.
The links that you have provided have been very helpful.
I have been slowly making my way through them.

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Noob Investor
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Re: $100K to Invest - Complete Beginner

Post by Noob Investor » Fri Feb 14, 2020 3:31 pm

ruralavalon wrote:
Thu Jan 16, 2020 2:45 pm
Noob Investor wrote:
Thu Jan 16, 2020 2:40 pm
ruralavalon wrote:
Thu Jan 16, 2020 2:27 pm
Noob Investor wrote:
Wed Jan 15, 2020 2:38 pm
  • Should I put all funds into a SPAXX account until I learn more and get the accounts opened?
In my prior response I forgot another cash-like possibility at Fidelity. Fidelity offers commission free transactions of iShares products.

So you could use iShares Ultra Short-Term Bond ETF (ICSH) current SEC Yield = 2.00% to temporarily hold your money while you figure out what to do and open your accounts.
Thanks!

I was looking into the Direct Savings account by HSBC which provides a 2% APY.
I was planning on opening that, moving the money in temporarily, and then when my solo 401(k) opens, start to move all money into those accounts and leave my emergency fund with HSBC.
That sounds very reasonable.
Hope you are doing well!
I just wanted to circle back around to this.

The solo 401(k) is all set up through E-Trade and I am getting ready to contribute.
Since the plan was set up after the New Year, I am unable to make contributions to this plan for 2019.
So, since I want to get the $100k invested... I am thinking of this strategy for now.

I would start by making a $19,500 contribution to the solo 401(k) on the employee side which would max for the year 2020.
I would buy the total market bond fund for all $19,500 which would bring me close to the 20% bond allocation that I want.

Next, I would max out 2019 and 2020 Roth IRAs ($12,000 total) and buy the Total Stock Market Index for this.

Finally, I would place the remaining $68,500 in the taxable account made up of what I have below to bring my US:Int ratio to 80:20 across all investments.
$52,400 in Total Stock Market Index
$16,100 in Total International Stock Market Index

Finally, I plan to continue to make monthly contributions ($3,000 or so) to the taxable account.
At the end of the year, I should be able to hit the max contribution limit for the 401k at $57,000 and at that time, I plan to increase stock holdings within the account. I would either invest the money accumulated in my bank account or use some of the taxable account funds.

Is this a good plan?
Should I toss all of that into the taxable account?

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