Where to start - advising my DS #2

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cjzimmer2
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Where to start - advising my DS #2

Post by cjzimmer2 »

I'm new to learning anything about investing but realize it's way past time. I've read most of The Simple Path to Wealth and browsed some on here. But I still need things spelled out pretty simply. I've also got 2 adult children who are working (and living at home) that I need to start teaching this topic to as well. Since each group (DH and I, DS #1 and DS #2) each have distinct situations I'm going to ask about each in different posts as I gather the information.

I'll start with DS #2 (he's 20) as his is the simpliest and I'm hoping to build my knowledge base while instructing him.

Started first job 1 week ago at a fast food restaurant. They have a 401k they can contribute to after working there 30 days but no details on options yet. However there is no company matching until they have been there for a full year so really he can invest anywhere that makes the most sense. If he stays there for the remainder of the year , we estimate he will earn about $8,000. However, he really wants to get into the trades. He is on an apprenticeship list for electrician but since we don't know his ranking we have no idea when/if he may get called. He already knows he doesn't like fast food but he's not the most motivated kid so who knows if/when he will get around to applying elsewhere.

His only expenses in life are $7 a month for his cell phone (we are pretty frugal), we contribute 10% to our church and ongoing expenses for car repairs/gas and fun money. So really the bulk of his money after taxes is unallocated at this point. At some point he would like to move out but I expect it will be a year or 2 (or several) before he has established himself well enough to do that.

So I'm thinking the best choice for him would be to create a Roth IRA, and max it out at $6k and call it good for this year. Thoughts?

For next year assuming he makes no job changes, I estimate his gross income would be about $23,000. He will be paying some rent and have to pay insurance on his car so not quite as much extra and any 401k match wouldn't kick in until September. I assume put another 6K in his Roth IRA and if he still has extra then do????(not sure what the best next step is).

Thanks so much for helping.

Edit #1: many mentioned below about concerns to save $6k on such low income, DS is an extreme introvert and really doesn't have friends/go out/spend money. But even if he decides not to save $6k this year, what would be our best plans for next year?

Edit #2 (also posted below) Just had a long talk with DS #2 about finances. He's had conversations with the youth pastor in the past so he was already planning on saving at least 50% of his income. When I explained about how the Roth IRA worked, he was totally fine with fully funding it for this year. He was hoping to buy a gaming laptop this year but he said he would hold off on that till next year if he didn't have enough left. He actually already has more on hand than I realized ($2k in the bank but he has another $1k in cash sitting in his room from various odd jobs he has done this year that he never bothered to put in the bank) so would only need $3k of his $8K earnings to fund it. So he can probably still get his laptop but if not he is fine with waiting and understands the importance of investing now while he is young and doesn't have much for expenses. Oh and I checked on his college fund, turns out it is UTMA (I thought it was a 529 like his brother's but I was mistaken) which from what I understand will have fewer restrictions especially since I believe it will "mature" (not sure what the correct word is but it seems in our state the age is 21 and he will turn that next year) in 2021. it has $16K in it so I think we can count that as his emergency fund for now (my grandparents were great setting up things for they younger generations but no one bothered to pass the knowledge of how/why on to younger generations and I really missed the ball learning this stuff when I was younger)

So now for me to figure out how to do this. I've been reading about much debate about whether Vanguard or Fidelity is better but will probably go with vanguard just because that seems to be slightly preferred here. Which brings me to the next question: I've been reading the Simple Path, which recommends 2 funds, and I know on here it seems 3 funds. But Simple Path also talks about using just VTSAX for wealth building. So for someone who doesn't love this stuff, and is still very much trying to wrap my brain about the topic and trying to sort/guide 3 different people in 3 very different financial positions, what is the best choice knowing, that I will not be revisiting the allocation stuff often? At age 20 is it adviseable to go 100% in stocks, or is 90/10 better? And how to I decide between mutual funds and ETF? I keep reading about them trying to makes sense of the differences and why one would chose one over the other but I'm just not gaining any clarity in how to make this decision?
Last edited by cjzimmer2 on Wed Sep 16, 2020 1:20 am, edited 3 times in total.
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Re: Where to start - advising my DS #2

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Welcome! DS #1 is here: Where to start - advising my DS #1
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Re: Where to start - advising my DS #2

Post by BolderBoy »

cjzimmer2 wrote: Mon Sep 14, 2020 8:12 pmSo I'm thinking the best choice for him would be to create a Roth IRA, and max it out at $6k and call it good for this year. Thoughts?
I agree if you can get him to do it. $6k out of $8k gross is a lot to ask of a 20 y/o.

If he does it, he should put it all in Vanguard's VTSAX mutual fund and not look at it again for a long time.
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Re: Where to start - advising my DS #2

Post by JoinToday »

Consider a Roth IRA, not a traditional IRA or 401k. His tax bracket may never be lower than it is now.

But I agree with the previous poster, it may be tough without an incentive ($$) for him to contribute
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Re: Where to start - advising my DS #2

Post by cjzimmer2 »

BolderBoy wrote: Mon Sep 14, 2020 8:44 pm
cjzimmer2 wrote: Mon Sep 14, 2020 8:12 pmSo I'm thinking the best choice for him would be to create a Roth IRA, and max it out at $6k and call it good for this year. Thoughts?
I agree if you can get him to do it. $6k out of $8k gross is a lot to ask of a 20 y/o.

If he does it, he should put it all in Vanguard's VTSAX mutual fund and not look at it again for a long time.
JoinToday wrote: Mon Sep 14, 2020 9:04 pm Consider a Roth IRA, not a traditional IRA or 401k. His tax bracket may never be lower than it is now.

But I agree with the previous poster, it may be tough without an incentive ($$) for him to contribute
I forgot to mention he also has probably $2K sitting in a savings account in the bank (cause I really didn't know what to do with it as people gifted him money over the years) that I figured could be used for some of the 6k. SInce he's used to not spending money (he probably spends at most 100-150 a month right now), I figured now was the time to really get him used to saving a large amount before he starts incurring real expenses in life and has a taste of what spending money feel like. He does have money in a college savings account (that his great grandparents set up years ago and I don't remember what kind of account it is) but as soon as he decided he didn't want to go to college, he wanted to leave that so that some day he could use it as a downpayment on a house. He's been very good about only spending cash he gets from odd jobs and never taking money out of the bank for "fun" stuff. He's also an extreme introvert so seldom goes anywhere with people that involves spending money. So it may not be as difficult as with a typical young adult.
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Re: Where to start - advising my DS #2

Post by woolie »

It’s great that you’re starting him early. Time will be on his side. However, i would recommend not putting much into a Roth or other retirement account. Maybe just the minimum to open one and then $50 a month automatic contribution. This will get his feet wet and set up good habits. But his priority should be building up a cash reserve and establishing a career path so that he can become financially self-sufficient. Electrical tradesman could be that path, but I don’t understand why he needs to wait or what he is waiting for. Has he completed the classroom work and now waiting for a spot as an apprentice? There are many paths into the trades: community colleges, vocational schools, etc. Most will help find apprentice positions as well as provide the necessary classes. Keep in mind that the classes and the exams cost money, another reason he should be saving cash in the bank now rather than locking a lot of it in a retirement account.
Good luck!
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Re: Where to start - advising my DS #2

Post by livesoft »

So I'm thinking the best choice for him would be to create a Roth IRA, and max it out at $6k and call it good for this year. Thoughts?
Totally agree. If he cannot or won't do this, then give him the money to do it if you have it.

My son started a new job last week. He has no expenses, so he is maxing out his Roth IRA and his 401(k). He's calling it good for this year, too.

Others may not like it, but I consider my son's retirement accounts just an extension of his parents' retirement accounts because his parents will never ever spend all their retirement account money anyways. Put that in your pipe and smoke it.
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Re: Where to start - advising my DS #2

Post by EnjoyIt »

As 20 years old, I’m sure he wants to have a little bit of fun as well. What about dating? Out of the $8k I would assume he will want to spend some of it on fun. I agree with saving some cash, but saving 75% of such a small income appears a bit excessive to me.

When I was 20 all I could think about is girls and what I needed to meet girls. That costs money. Lots of money. That lasted right up until I met my current spouse. The process was not “frugal” but plenty fun.
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Re: Where to start - advising my DS #2

Post by DSBH »

livesoft wrote: Tue Sep 15, 2020 9:12 am
So I'm thinking the best choice for him would be to create a Roth IRA, and max it out at $6k and call it good for this year. Thoughts?
Totally agree. If he cannot or won't do this, then give him the money to do it if you have it.
+1. First ask him to put up 3k and offer 1:1 matching, if he disagrees then ask for 2k and 2:1 matching, else 1k and 5:1 matching, else surrender and gift him the money to do it if you can.
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Re: Where to start - advising my DS #2

Post by cjzimmer2 »

woolie wrote: Tue Sep 15, 2020 9:07 am It’s great that you’re starting him early. Time will be on his side. However, i would recommend not putting much into a Roth or other retirement account. Maybe just the minimum to open one and then $50 a month automatic contribution. This will get his feet wet and set up good habits. But his priority should be building up a cash reserve and establishing a career path so that he can become financially self-sufficient. Electrical tradesman could be that path, but I don’t understand why he needs to wait or what he is waiting for. Has he completed the classroom work and now waiting for a spot as an apprentice? There are many paths into the trades: community colleges, vocational schools, etc. Most will help find apprentice positions as well as provide the necessary classes. Keep in mind that the classes and the exams cost money, another reason he should be saving cash in the bank now rather than locking a lot of it in a retirement account.
Good luck!
The apprenticeship program he applied for includes all the training/schooling/job placement so taking the classes outside would be redundant and cost him money that wouldn't need to be spent. Yes he could go other routes and pay for the training himself, however those programs require full time schooling for a year plus and frankly full time school is not in his best interests/abilities. A job that teaches hands on along with any necessary classroom is really his best chance for success.
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Re: Where to start - advising my DS #2

Post by cjzimmer2 »

EnjoyIt wrote: Tue Sep 15, 2020 9:17 am As 20 years old, I’m sure he wants to have a little bit of fun as well. What about dating? Out of the $8k I would assume he will want to spend some of it on fun. I agree with saving some cash, but saving 75% of such a small income appears a bit excessive to me.

When I was 20 all I could think about is girls and what I needed to meet girls. That costs money. Lots of money. That lasted right up until I met my current spouse. The process was not “frugal” but plenty fun.
I mentioned in a later comment but probably should have put in the main post. He is an EXTREME introvert. He has like 4 friends and all are in other relationships so not available to socialize much. The idea of him being interested in girls is laughable (not laughing at you for suggesting it but just knowing how my DS is) because with having 3 sisters, he still is in the stage of "girls are horrible" and he won't even speak to a female outside of the family if he doesn't absolutely have to. So yeah, he isn't working because he needs/wants money, he's working because we told him he had to find a job and wasn't allowed to stay home all day and play games.

He's always done odd jobs for cash for family members and even with a very limited income, has always saved more than 50% of it so the amount isn't the issue, it's the best plan of what to do that I want to make sure that I impart to him. And besides even if he decides he doesn't want to save the $6k, the idea of what to do still is the focus.
Last edited by cjzimmer2 on Tue Sep 15, 2020 10:39 am, edited 1 time in total.
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Re: Where to start - advising my DS #2

Post by EnjoyIt »

cjzimmer2 wrote: Tue Sep 15, 2020 10:18 am
EnjoyIt wrote: Tue Sep 15, 2020 9:17 am As 20 years old, I’m sure he wants to have a little bit of fun as well. What about dating? Out of the $8k I would assume he will want to spend some of it on fun. I agree with saving some cash, but saving 75% of such a small income appears a bit excessive to me.

When I was 20 all I could think about is girls and what I needed to meet girls. That costs money. Lots of money. That lasted right up until I met my current spouse. The process was not “frugal” but plenty fun.
I mentioned in a later comment but probably should have put in the main post. He is an EXTREME introvert. He has like 4 friends and all are in other relationships so not available to socialize much. The idea of him being interested in girls is laughable (not laughing at you for suggesting it but just knowing how my DS is) because with having 3 sisters, he still is in the stage of "girls are horrible" and he won't even speak to a female outside of the family if he doesn't absolutely have to. So yeah, he isn't working because he needs/wants money, he's working because we told him he had to find a job and wasn't allowed to stay home all day and play games.

He's always done odd jobs for cash for family members and even with a very limited income, has always saved more than 50% of it so the amount isn't the issue, it's the best plan of what to do that I want to make sure that I impart to him. And besides even if he decides he doesn't want to save the $6k, the idea of what to do still is the focus.
Since you tithe maybe he will find a nice introverted girl at church. Either way, it’s great to give him some focus and also it is very important to start building that social security history even if it is small.

Regarding your question, yeah at his income Roth IRA is the best location for savings.
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Re: Where to start - advising my DS #2

Post by Brianmcg321 »

Have him read this blog. And buy him the book.
https://jlcollinsnh.com/stock-series/

No reason to get any more complicated.
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Re: Where to start - advising my DS #2

Post by cjzimmer2 »

Just had a long talk with DS #2 about finances. He's had conversations with the youth pastor in the past so he was already planning on saving at least 50% of his income. When I explained about how the Roth IRA worked, he was totally fine with fully funding it for this year. He was hoping to buy a gaming laptop this year but he said he would hold off on that till next year if he didn't have enough left. He actually already has more on hand than I realized ($2k in the bank but he has another $1k in cash sitting in his room from various odd jobs he has done this year that he never bothered to put in the bank) so would only need $3k of his $8K earnings to fund it. So he can probably still get his laptop but if not he is fine with waiting and understands the importance of investing now while he is young and doesn't have much for expenses. Oh and I checked on his college fund, turns out it is UTMA (I thought it was a 529 like his brother's but I was mistaken) which from what I understand will have fewer restrictions especially since I believe it will "mature" (not sure what the correct word is but it seems in our state the age is 21 and he will turn that next year) in 2021. it has $16K in it so I think we can count that as his emergency fund for now (my grandparents were great setting up things for they younger generations but no one bothered to pass the knowledge of how/why on to younger generations and I really missed the ball learning this stuff when I was younger)

So now for me to figure out how to do this. I've been reading about much debate about whether Vanguard or Fidelity is better but will probably go with vanguard just because that seems to be slightly preferred here. Which brings me to the next question: I've been reading the Simple Path, which recommends 2 funds, and I know on here it seems 3 funds. But Simple Path also talks about using just VTSAX for wealth building. So for someone who doesn't love this stuff, and is still very much trying to wrap my brain about the topic and trying to sort/guide 3 different people in 3 very different financial positions, what is the best choice knowing, that I will not be revisiting the allocation stuff often? At age 20 is it adviseable to go 100% in stocks, or is 90/10 better? And how to I decide between mutual funds and ETF? I keep reading about them trying to makes sense of the differences and why one would chose one over the other but I'm just not gaining any clarity in how to make this decision?
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Re: Where to start - advising my DS #2

Post by Megamill »

FWIW, my DS is a few yrs younger and earned about 3,500 last year. I opened a Roth IRA for him @ fidelity and match his contributions. So he contributed 1,750 and I matched that for 2019 all in FZROX, and that’s the plan until he finishes college.
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Re: Where to start - advising my DS #2

Post by cjzimmer2 »

Megamill wrote: Wed Sep 16, 2020 5:45 am FWIW, my DS is a few yrs younger and earned about 3,500 last year. I opened a Roth IRA for him @ fidelity and match his contributions. So he contributed 1,750 and I matched that for 2019 all in FZROX, and that’s the plan until he finishes college.
So is that as mutual funds or as ETF's? (I'm assuming both are an option for FZROX, other than knowing that is Fidelity name account that is similar to VTSAX, I haven't really researched the Fidelity stuff much yet)
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Re: Where to start - advising my DS #2

Post by oldfort »

Focus on the big issues. Being able to find a job which pays more than $23k/year is going to be exponentially more important than whether the $6k in a Roth is 90/10 or 100/0. From the way, you emphasized EXTREME introvert, I suspect some mental health issues may be involved. Has he ever been tested for autism? I would want a full evaluation from a psychiatrist and/or neurologist.
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Re: Where to start - advising my DS #2

Post by cjzimmer2 »

oldfort wrote: Wed Sep 16, 2020 10:14 am Focus on the big issues. Being able to find a job which pays more than $23k/year is going to be exponentially more important than whether the $6k in a Roth is 90/10 or 100/0. From the way, you emphasized EXTREME introvert, I suspect some mental health issues may be involved. Has he ever been tested for autism? I would want a full evaluation from a psychiatrist and/or neurologist.
No he's never been tested but he does comes from a family with many moderate to extreme introverts on both sides of the family tree so I've never perceived it to be a big issue. Late bloomer would definitely be an appropriate term to apply. I've seen many of those same family members move past it as they started working and thus in essence being "forced" to interact as well as general maturity/self-confidence. I do think there is some anxiety issues which probably contributes to his poor interviewing skills. His older brother definitely exhibited some aspergers (I guess they just lump it altogether as autism now) but not this one. He did have some some mild learning issues when he was younger but nothing requiring intervention and he has learned some good compensating skills. He's been a work less than 2 weeks, they've already mentioned moving him to a supervisor position once he meets the requirements (including longevity, minimum age and so other stuff they he couldn't itemize to me). He is a very good worker but he just needs to work on his people skills. So I'm totally fine with him working in a low paying job for a year or 2 just for the practice of interacting appropriately with people. He CAN interact with people, he just prefers NOT to.
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Re: Where to start - advising my DS #2

Post by oldfort »

cjzimmer2 wrote: Wed Sep 16, 2020 11:15 am
oldfort wrote: Wed Sep 16, 2020 10:14 am Focus on the big issues. Being able to find a job which pays more than $23k/year is going to be exponentially more important than whether the $6k in a Roth is 90/10 or 100/0. From the way, you emphasized EXTREME introvert, I suspect some mental health issues may be involved. Has he ever been tested for autism? I would want a full evaluation from a psychiatrist and/or neurologist.
No he's never been tested but he does comes from a family with many moderate to extreme introverts on both sides of the family tree so I've never perceived it to be a big issue. Late bloomer would definitely be an appropriate term to apply. I've seen many of those same family members move past it as they started working and thus in essence being "forced" to interact as well as general maturity/self-confidence. I do think there is some anxiety issues which probably contributes to his poor interviewing skills. His older brother definitely exhibited some aspergers (I guess they just lump it altogether as autism now) but not this one. He did have some some mild learning issues when he was younger but nothing requiring intervention and he has learned some good compensating skills. He's been a work less than 2 weeks, they've already mentioned moving him to a supervisor position once he meets the requirements (including longevity, minimum age and so other stuff they he couldn't itemize to me). He is a very good worker but he just needs to work on his people skills. So I'm totally fine with him working in a low paying job for a year or 2 just for the practice of interacting appropriately with people. He CAN interact with people, he just prefers NOT to.
You don't have to take my advice, but none of the behavior you describe sounds normal. Having a total of four semi-friends at his age, and it sounds like he doesn't spend much time with them either isn't normal(at least before COVID forced us to social distance). "He won't even speak to a female outside of the family if he doesn't absolutely have to" isn't normal. Being older than 12 and continuing to be in "the girls are horrible" phase isn't normal. Aspergers is now considered part of the ASD continuum. ASD has a strong genetic component. If one brother has it, there's a good chance the other does too.
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Re: Where to start - advising my DS #2

Post by cjzimmer2 »

oldfort wrote: Wed Sep 16, 2020 10:14 am
You don't have to take my advice, but none of the behavior you describe sounds normal. Having a total of four semi-friends at his age, and it sounds like he doesn't spend much time with them either isn't normal. "He won't even speak to a female outside of the family if he doesn't absolutely have to" isn't normal. Being older than 12 and continuing to be in "the girls are horrible" phase isn't normal. Aspergers is now considered part of the ASD continuum. ASD has a strong genetic component. If one brother has it, there's a good chance the other does too.
[ quote fixed by admin LadyGeek]

Interesting perspective that I will have to look into more later. I guess it seems within the realm of normal to me since I've seen many family members (myself included, I had zero interest in the opposite gender till after college, I had other plans and none of them included relationships) with very similar traits go on to live very happy successful lives. I suppose if one is surrounded by people of similar personality traits than it's easy to see that as "normal" even if society at large doesn't view it that way. As one who has never wanted or needed more than 1-2 friends at any given time. 4 seems plenty to me but again I can see where my perspective could be skewed.
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Re: Where to start - advising my DS #2

Post by swylie »

As far as the ETF v. Mutual Fund distinction....Vanguard is currently converting most of its core funds to ETFs. The only significant difference between a fund and ETF is that ETF's trade like stocks, so their prices fluctuate during the day as the market goes up/down. Also, expense ratios for ETFs tend to mirror the cheapest fund expense ratios (for exmple, the BIV (Intermediate Bond Index) ETF has an expense ratio of .05% while the corresponding mutual fund VBILX has an expense ratio of .07%). Another advantage to ETF's over mutual funds is that you can set your price for trades, so you know exactly what price per share you will pay, as opposed to funds where you buy/sell at whatever closing price the fund posts on the day you make your trade. Paying such close attention to price probably goes counter to general Vanguard philosophy (akin to timing the market), but it's nice to have the flexibility and know exactly what price you're paying when you trade ETFs.

As to your general situation, I'd only say that a year or two is a lifetime for a 20 year-old. And though contributing money to a ROTH at such an early age will certainly be appreciated when he reaches retirement, there are a lot of ways to invest money that have huge payoffs--education being huge.
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Re: Where to start - advising my DS #2

Post by cjzimmer2 »

swylie wrote: Wed Sep 16, 2020 12:04 pm As far as the ETF v. Mutual Fund distinction....Vanguard is currently converting most of its core funds to ETFs. The only significant difference between a fund and ETF is that ETF's trade like stocks, so their prices fluctuate during the day as the market goes up/down. Also, expense ratios for ETFs tend to mirror the cheapest fund expense ratios (for exmple, the BIV (Intermediate Bond Index) ETF has an expense ratio of .05% while the corresponding mutual fund VBILX has an expense ratio of .07%). Another advantage to ETF's over mutual funds is that you can set your price for trades, so you know exactly what price per share you will pay, as opposed to funds where you buy/sell at whatever closing price the fund posts on the day you make your trade. Paying such close attention to price probably goes counter to general Vanguard philosophy (akin to timing the market), but it's nice to have the flexibility and know exactly what price you're paying when you trade ETFs.

As to your general situation, I'd only say that a year or two is a lifetime for a 20 year-old. And though contributing money to a ROTH at such an early age will certainly be appreciated when he reaches retirement, there are a lot of ways to invest money that have huge payoffs--education being huge.
That is a very helpful explanation of the funds versus ETF's. But how does one know how much to "bid" when purchasing? I want to open the Roth IRA for DS in one of the funds mentioned here. How do I decide what number to enter as an amount I'm willing to pay in order to get the purchase done? I'm a bit confused on the mechanics of my next step.

The money in UTMA account was intended to help fund his education, but school has not been a successful experience for him and he feels he will do better learning skills in more hands on environment. I fully agree with him on this. We take the approach that college is way too expensive to spend the money to play around or figure out what you want to do later type of activity. I'm not requiring him to work at fast food. I'm simply requiring him to get a job. There are many people in our church who work in the trades and many own their own company. He was unwilling to talk to any of them about getting a job or even inquiring about leads. He applied to a welding apprenticeship, the program offered free interview practice/ resume writing tutoring etc. He was unwilling to talk to them. We've showed him many jobs he could apply for but he's been very apathetic about applying for much of anything. DS#1 had the perfect job fall in his lap with almost zero effort on his part. DS #2 seems to expect the same should happen for him as well. So even if there are things he could be improving, at the moment he is unwilling to do much of them. So my viewpoint is let him sit in a job he doesn't like for a while, he will be learning people skills which is beneficial and eventually hope that he tires of it and will put in the effort to find something better. There is only so much I can "force" him to do so I'm trying to help him find the motivation to do more even if my "help" is simply making him miserable enough that he decides status quo isn't cutting it.
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Re: Where to start - advising my DS #2

Post by livesoft »

cjzimmer2 wrote: Wed Sep 16, 2020 1:14 pm That is a very helpful explanation of the funds versus ETF's. But how does one know how much to "bid" when purchasing? I want to open the Roth IRA for DS in one of the funds mentioned here. How do I decide what number to enter as an amount I'm willing to pay in order to get the purchase done? I'm a bit confused on the mechanics of my next step.
Here is my suggestion:

1. Look to see what the current bid and ask prices are and the last price. This is done by getting a "quote" which should be automatic when you are looking at an ETF ticker symbol. Example, ticker is VTI, here is a typical quote: https://finance.yahoo. com/quote/VTI?p=VTI

2. Decide how many shares you can buy at the last executed price. Say you have $1700 to invest and for VTI the last price was $173.94, AND the bid and the ask are near that price. That is, the price tag is about $174 per share. So you can buy 9 shares, but not 10 shares.

3. Submit a market order to buy 9 shares. And that's it. You do not have to decide how much to bid at all.

---alternate---

Suppose you have $1739.18 to invest and you see that VTI is selling at about $174. Since you do not have enough to buy 10 shares at $174, but you have almost enough, submit a limit order to buy 10 shares at $173.91 a share. You have enough money for that if someone will actually drop their price to what you have offered. Your order may not execute, but maybe it will

As long as you do not care if your order executes, then you can do lots of things to see how it all works. For example, you could submit a limit order to buy 20 shares with bid of $25 a share, but since other people are buying and selling around $174 a share, your order will not execute.

You can always change or cancel an order that has not executed, so it really is not a big deal.
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BL
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Re: Where to start - advising my DS #2

Post by BL »

I suggest all of you read this 16-page free pdf:
https://www.etf.com/docs/IfYouCan.pdf

It gives you the basics of investing and personal finance for someone just starting out and a review for the rest of us. The "How Millennials can get rich slowly" is a good addition to the title.

I think investing in a low-cost target date fund (target date is year you plan to retire) is great for anyone, especially a new investor. Vanguard has low-expense ratio funds. Their fund requires $1000 for initial investment, and any small amount after that. Be sure to select e-notifications to avoid low-balance fees. It has the 4 basic funds: total US and foreign stocks and bonds, with about 10% bonds which stays the same until much closer to retirement when it starts getting more bonds. (Nothing wrong with just Total stock Market if that is what they prefer. The important thing is "set and forget.")
EnjoyIt
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Re: Where to start - advising my DS #2

Post by EnjoyIt »

livesoft wrote: Wed Sep 16, 2020 1:30 pm
cjzimmer2 wrote: Wed Sep 16, 2020 1:14 pm That is a very helpful explanation of the funds versus ETF's. But how does one know how much to "bid" when purchasing? I want to open the Roth IRA for DS in one of the funds mentioned here. How do I decide what number to enter as an amount I'm willing to pay in order to get the purchase done? I'm a bit confused on the mechanics of my next step.
Here is my suggestion:

1. Look to see what the current bid and ask prices are and the last price. This is done by getting a "quote" which should be automatic when you are looking at an ETF ticker symbol. Example, ticker is VTI, here is a typical quote: https://finance.yahoo. com/quote/VTI?p=VTI

2. Decide how many shares you can buy at the last executed price. Say you have $1700 to invest and for VTI the last price was $173.94, AND the bid and the ask are near that price. That is, the price tag is about $174 per share. So you can buy 9 shares, but not 10 shares.

3. Submit a market order to buy 9 shares. And that's it. You do not have to decide how much to bid at all.

---alternate---

Suppose you have $1739.18 to invest and you see that VTI is selling at about $174. Since you do not have enough to buy 10 shares at $174, but you have almost enough, submit a limit order to buy 10 shares at $173.91 a share. You have enough money for that if someone will actually drop their price to what you have offered. Your order may not execute, but maybe it will

As long as you do not care if your order executes, then you can do lots of things to see how it all works. For example, you could submit a limit order to buy 20 shares with bid of $25 a share, but since other people are buying and selling around $174 a share, your order will not execute.

You can always change or cancel an order that has not executed, so it really is not a big deal.
OP,
The above is why I recommend stick with mutual funds. It’s way easier. You have $6k so you buy $6k worth off a fund at the end of the day price. Done. There are no bids, asks, or a few bucks left over because you can’t buy partial shares in most accounts.

No need to add any additional complexity if you don’t need to. You can always convert them to ETFs in the future without a fee of you so desire.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
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Re: Where to start - advising my DS #2

Post by livesoft »

EnjoyIt wrote: Thu Sep 17, 2020 10:13 am... You can always convert them to ETFs in the future without a fee of you so desire.
This is not completely true in the strict sense. Most Vanguard mutual funds do not have ETF equivalents. But yes, some of the Vanguard index mutual funds can be converted to ETFs without a sell and subsequent buy, but not all of them. However, all Vanguard mutual funds can be sold without a fee and all Vanguard ETFs can be bought without a fee.
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Re: Where to start - advising my DS #2

Post by Grt2bOutdoors »

cjzimmer2 wrote: Wed Sep 16, 2020 11:15 am
oldfort wrote: Wed Sep 16, 2020 10:14 am Focus on the big issues. Being able to find a job which pays more than $23k/year is going to be exponentially more important than whether the $6k in a Roth is 90/10 or 100/0. From the way, you emphasized EXTREME introvert, I suspect some mental health issues may be involved. Has he ever been tested for autism? I would want a full evaluation from a psychiatrist and/or neurologist.
No he's never been tested but he does comes from a family with many moderate to extreme introverts on both sides of the family tree so I've never perceived it to be a big issue. Late bloomer would definitely be an appropriate term to apply. I've seen many of those same family members move past it as they started working and thus in essence being "forced" to interact as well as general maturity/self-confidence. I do think there is some anxiety issues which probably contributes to his poor interviewing skills. His older brother definitely exhibited some aspergers (I guess they just lump it altogether as autism now) but not this one. He did have some some mild learning issues when he was younger but nothing requiring intervention and he has learned some good compensating skills. He's been a work less than 2 weeks, they've already mentioned moving him to a supervisor position once he meets the requirements (including longevity, minimum age and so other stuff they he couldn't itemize to me). He is a very good worker but he just needs to work on his people skills. So I'm totally fine with him working in a low paying job for a year or 2 just for the practice of interacting appropriately with people. He CAN interact with people, he just prefers NOT to.
OP - you are doing the right thing. The kid just needs to gain self confidence. I would not assign a label as others are doing by suggesting that he has an issue. The fastest way to gain self confidence is by repetitive action. Your son is obtaining that exposure by consistent interaction with his colleagues and the general public. Anyone who’s ever been in public facing role will understand what I’m talking about here. This is much more than “how can I help you”? Or “would you like fries with that”? Give it a year or two and you’ll see he’ll be more social. Just because someone is not chasing after the opposite gender does not imply anything is wrong with them - he could just be focused on other goals. Those doing the constant chasing could be the one with the problem. There’s no set timetable for an individual’s social agenda. Not everyone wants to be a social butterfly or need to hang out at the bar on the weekends to waste money if it doesn’t appeal to them.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Where to start - advising my DS #2

Post by oldfort »

Grt2bOutdoors wrote: Thu Sep 17, 2020 10:41 am
cjzimmer2 wrote: Wed Sep 16, 2020 11:15 am
oldfort wrote: Wed Sep 16, 2020 10:14 am Focus on the big issues. Being able to find a job which pays more than $23k/year is going to be exponentially more important than whether the $6k in a Roth is 90/10 or 100/0. From the way, you emphasized EXTREME introvert, I suspect some mental health issues may be involved. Has he ever been tested for autism? I would want a full evaluation from a psychiatrist and/or neurologist.
No he's never been tested but he does comes from a family with many moderate to extreme introverts on both sides of the family tree so I've never perceived it to be a big issue. Late bloomer would definitely be an appropriate term to apply. I've seen many of those same family members move past it as they started working and thus in essence being "forced" to interact as well as general maturity/self-confidence. I do think there is some anxiety issues which probably contributes to his poor interviewing skills. His older brother definitely exhibited some aspergers (I guess they just lump it altogether as autism now) but not this one. He did have some some mild learning issues when he was younger but nothing requiring intervention and he has learned some good compensating skills. He's been a work less than 2 weeks, they've already mentioned moving him to a supervisor position once he meets the requirements (including longevity, minimum age and so other stuff they he couldn't itemize to me). He is a very good worker but he just needs to work on his people skills. So I'm totally fine with him working in a low paying job for a year or 2 just for the practice of interacting appropriately with people. He CAN interact with people, he just prefers NOT to.
OP - you are doing the right thing. The kid just needs to gain self confidence. I would not assign a label as others are doing by suggesting that he has an issue. The fastest way to gain self confidence is by repetitive action. Your son is obtaining that exposure by consistent interaction with his colleagues and the general public. Anyone who’s ever been in public facing role will understand what I’m talking about here. This is much more than “how can I help you”? Or “would you like fries with that”? Give it a year or two and you’ll see he’ll be more social. Just because someone is not chasing after the opposite gender does not imply anything is wrong with them - he could just be focused on other goals. Those doing the constant chasing could be the one with the problem. There’s no set timetable for an individual’s social agenda. Not everyone wants to be a social butterfly or need to hang out at the bar on the weekends to waste money if it doesn’t appeal to them.
Working a fast food job is not an effective treatment for ASD, ADHD, or depression.
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Re: Where to start - advising my DS #2

Post by Grt2bOutdoors »

oldfort wrote: Thu Sep 17, 2020 11:09 am
Grt2bOutdoors wrote: Thu Sep 17, 2020 10:41 am
cjzimmer2 wrote: Wed Sep 16, 2020 11:15 am
oldfort wrote: Wed Sep 16, 2020 10:14 am Focus on the big issues. Being able to find a job which pays more than $23k/year is going to be exponentially more important than whether the $6k in a Roth is 90/10 or 100/0. From the way, you emphasized EXTREME introvert, I suspect some mental health issues may be involved. Has he ever been tested for autism? I would want a full evaluation from a psychiatrist and/or neurologist.
No he's never been tested but he does comes from a family with many moderate to extreme introverts on both sides of the family tree so I've never perceived it to be a big issue. Late bloomer would definitely be an appropriate term to apply. I've seen many of those same family members move past it as they started working and thus in essence being "forced" to interact as well as general maturity/self-confidence. I do think there is some anxiety issues which probably contributes to his poor interviewing skills. His older brother definitely exhibited some aspergers (I guess they just lump it altogether as autism now) but not this one. He did have some some mild learning issues when he was younger but nothing requiring intervention and he has learned some good compensating skills. He's been a work less than 2 weeks, they've already mentioned moving him to a supervisor position once he meets the requirements (including longevity, minimum age and so other stuff they he couldn't itemize to me). He is a very good worker but he just needs to work on his people skills. So I'm totally fine with him working in a low paying job for a year or 2 just for the practice of interacting appropriately with people. He CAN interact with people, he just prefers NOT to.
OP - you are doing the right thing. The kid just needs to gain self confidence. I would not assign a label as others are doing by suggesting that he has an issue. The fastest way to gain self confidence is by repetitive action. Your son is obtaining that exposure by consistent interaction with his colleagues and the general public. Anyone who’s ever been in public facing role will understand what I’m talking about here. This is much more than “how can I help you”? Or “would you like fries with that”? Give it a year or two and you’ll see he’ll be more social. Just because someone is not chasing after the opposite gender does not imply anything is wrong with them - he could just be focused on other goals. Those doing the constant chasing could be the one with the problem. There’s no set timetable for an individual’s social agenda. Not everyone wants to be a social butterfly or need to hang out at the bar on the weekends to waste money if it doesn’t appeal to them.
Working a fast food job is not an effective treatment for ASD, ADHD, or depression.
Where in the thread does it discuss the above? Is it fact or an assumption?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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