Toggle sidebar

OT: Investing

C

CommonSenseDog

Redshirt
Jul 5, 2019
38
0
0
Young and now have a lot of cash and want to start putting it to work to become a millionaire in 20 years. (Spend very little on frivolous things, dont eat out often, and only put around 12% of income towards housing)

. Is the best option just to throw it at an index fund and let it ride, paying into it at regular intervals. Any one of these better than another (VOO vs SPDR)? Or should I work with a manager?
 
Dawg1976

Dawg1976

All-Conference
Aug 22, 2012
8,170
2,675
113
If you are in your 20's there is nothing wrong with your plan. I was 100% stocks in my early years. You could also buy into a target retirement fund which will also be pretty aggressive but will become more conservative over time. I have never had a money manager and I retired at 52. Just stay with your plan and don't get spooked when stocks are volatile.
 
R

rezdawg

Redshirt
Jan 6, 2010
130
21
18
Dawg1976 said:
If you are in your 20's there is nothing wrong with your plan. I was 100% stocks in my early years. You could also buy into a target retirement fund which will also be pretty aggressive but will become more conservative over time. I have never had a money manager and I retired at 52. Just stay with your plan and don't get spooked when stocks are volatile.
Click to expand...

What he said, start early and be consistent. Stay with the same employer(pension) and spouse(don't divide by 2).
 
E

ezsoil

Junior
May 26, 2013
1,328
266
83
rezdawg said:
What he said, start early and be consistent. Stay with the same employer(pension) and spouse(don't divide by 2).
Click to expand...

your plan is solid...another thing you may want to consider is your tax planning. Managing your federal and state taxes can make a huge difference .and these two issues can't be stressed enough into regards of your employer based retirement and avoid divorce....learn the dates of vesting and understand all your investment options within your company contribution plan
 
C

Crazy Cotton

All-Conference
Aug 26, 2012
3,650
1,411
113
I like this, wish I had understood this when I was younger. Pay real, real close attention to the expense ratio when you're investing for the long term. VTSAX charges you .04%, that's insanely cheap. You buy a managed fund, and (a) it won't perform as well as an index over the long term, and (b) Even if it did, you are probably paying an expense ratio between .6 an 1.+. That will eat you up over the long haul. If you use a manager, make sure you understand why you are doing that (e.g. taxes), and make sure you understand exactly what that person is going to charge you.
 
C

Cap'n Geech

Redshirt
Aug 15, 2018
613
0
0
You're a couple years late. No one that knows anything about bitcoin continues to make the tulip comparison.
 
B

bsquared24

Sophomore
Jul 11, 2009
720
137
43
Dont get married, they will take all your money. If you get divorced you lose even more some how.
 
L

lanceharbor7

Redshirt
Feb 24, 2008
909
47
28
Do you want to control your investments or leave them up to market index performance? There are a ton of tax advantages to real estate and rates are low.

CommonSenseDog said:
Young and now have a lot of cash and want to start putting it to work to become a millionaire in 20 years. (Spend very little on frivolous things, dont eat out often, and only put around 12% of income towards housing)

. Is the best option just to throw it at an index fund and let it ride, paying into it at regular intervals. Any one of these better than another (VOO vs SPDR)? Or should I work with a manager?
Click to expand...
 
G

GTAdawg

Redshirt
Sep 11, 2010
2,162
25
48
Common sense tells me a message board may not be a good place to find a how to become a millionaire quick scheme.
 
HotMop

HotMop

All-American
May 8, 2006
7,856
6,168
113
CommonSenseDog said:
Young and now have a lot of cash and want to start putting it to work to become a millionaire in 20 years. (Spend very little on frivolous things, dont eat out often, and only put around 12% of income towards housing)

. Is the best option just to throw it at an index fund and let it ride, paying into it at regular intervals. Any one of these better than another (VOO vs SPDR)? Or should I work with a manager?
Click to expand...

17 all that solid advice, head to Vegas!
 
C

chem1970

Redshirt
May 5, 2013
108
0
0
I have tried many investment vehicles, including Vanguard Funds which is excellent, but my favorite is T. Rowe Price. Highly rated family of funds, no load and low internal fees with outstanding customer service.

Considering your age I recommend dollar cost averaging every month, twice per month (e.g. on the 3rd and 18th of each month) in the following funds:

70% in the T. Rowe Price Blue Chip Growth Fund (TRBCX) a Morningstar 5* fund.
20% in the T. Rowe Price High Yield Fund (TUHYX)
10% in the T. Rowe Price Tax Free Income Fund provided you’re investing after tax dollars and not investing in a retirement account (PRTAX)

I have been putting my money in those funds for a long time. It’s very easy to open an account online at troweprice.com and start an automatic withdrawal from your checking account.
 
Captain Ron

Captain Ron

Junior
Aug 22, 2012
690
305
63
At your age, start with a Roth IRA and a Roth 401k if your company offers the Roth 401k option.
Always put in enough to get the company match if there is one.

Like many other posters said, expenses will eat you alive over the long haul. Very few actively managed funds ever beat the S&P. So, it really kind of depends how involved you want to be and the goal of the money.

Assuming it is for retirement, you can not go wrong with a target retirement fund from Vanguard, TR Price etc. It is basically one stop shopping.

A little more involved? Low cost index funds from the same brokers and create a mix of domestic and international funds.

Really involved? Pick your own stocks to invest (not trade) and try and diversify over sectors and domestic/international.

I love dividends. The power of compound interest is amazing and especially for somebody in their 20’s. (See the calculator below) A individual who can max their 401k even without a company match can easily be a millionaire in 20 years. Got a bigger chunk of cash to seed it with? It happens much faster.

https://www.investopedia.com/calculator/dvcal.aspx

https://www.amazon.com/Get-Rich-Dividends-Earning-Double-Digit/dp/1118994132/ref=asc_df_1118994132_nodl/?tag=hyprod-20&linkCode=df0&hvadid=312243616995&hvpos=1o1&hvnetw=g&hvrand=3603877294194380662&hvpone=&hvptwo=&hvqmt=&hvdev=t&hvdvcmdl=&hvlocint=&hvlocphy=9010753&hvtargid=pla-=1

Remember, you are in for the long haul. Don’t try and time the market and sell every time there is news of a trade war or recession. You want to be buying (dollar cost averaging) as this is when you are getting cheaper shares. Ask those that stayed invested during the last recession how far ahead they are of their friends who sold low.

The stock market so weird as it is about the only place where a consumer is consistently buying and gets freaked out when prices are dropping.
 
was21

was21

Senior
May 29, 2007
9,944
592
113
Not only that, but Vanguard funds are no load as well. Index funds factually outperform managed funds over the long haul. And yes, expense ratio is very important. Administrative fees are also ridiculously low
 
Jeffreauxdawg

Jeffreauxdawg

All-American
Dec 15, 2017
8,840
7,825
113
CommonSenseDog said:
Young and now have a lot of cash and want to start putting it to work to become a millionaire in 20 years. (Spend very little on frivolous things, dont eat out often, and only put around 12% of income towards housing)

. Is the best option just to throw it at an index fund and let it ride, paying into it at regular intervals. Any one of these better than another (VOO vs SPDR)? Or should I work with a manager?
Click to expand...

If I was 30 years old and had $1000 pretax a month to invest I would put 75% towards retirement and the rest into a brokerage account with low fee indexes (Schwab, price, vanguard.) If I had $2000 per month I would invest $750 into retirement and the rest into the brokerage (assuming I have a stable employment outlook.) If I wanted to be a millionaire in 20 years that number would need to be about $3000+ pretax. $750 to pretax retirement and $1750 after taxes (upwards of $2250 pretax) to the brokerage account. Which at a return of 8% would get me close to a million in the brokerage account 20 years if I never touched it.

It's doable, but making it to a millionaire in 20 years from scratch usually takes a windfall of some sort. It takes a special kind of person to live far enough below there means to save their way there in 20... Now in 35 years, that's a whole lot easier. That $750 per month in my retirement at 30 will be $1.6 million at 65.

The reality is there is some happy medium between setting yourself up for retirement and enjoying the ride there. There's a million different ways to do it and you should just find the path you are most likely to stay on.

Final bit of advice, find you a woman that makes more money than you. They either make it or spend it brother...
 
TheStateUofMS

TheStateUofMS

All-Conference
Dec 26, 2009
10,311
2,346
113
If you don't want to study stocks, which you have to spend a lot of time on each one if you want to own individual stocks, put it in the VOO and forget it.

The SPY is what you meant to say. The SPDR (Spider) is just a name for an index fund.

You can only work with a manager if you have like $250,000-$500,000 to invest if you want legit advice. You'll pay a fee for it. At least $2,000 a year if your assets are in the lower end of that range and closer to $4-5k per year if you have the upper end of that range.

Edward Jones will work with any body regardless of asset size.

I think your best bet is to put it in an index fund and when you get sizable assets, go look for a fee based adviser.
 
TheStateUofMS

TheStateUofMS

All-Conference
Dec 26, 2009
10,311
2,346
113
I own some BTC as well, but a small amount. I'm going to be really rich or lose very little.

My break even is around BTC $8k.

There's value in BTC, but there's no way to assign an actual value to it. Purely speculative.
 
TheStateUofMS

TheStateUofMS

All-Conference
Dec 26, 2009
10,311
2,346
113
Cap'n Geech said:
You're a couple years late. No one that knows anything about bitcoin continues to make the tulip comparison.
Click to expand...

Cap'n the Tulip Bulb Mania bubble already played out perfectly. Rising to $19k then crashing to under $4k is the definition of a mania bubble. Happened in pot stocks. Happening now in Beyond Meat. Happened with "Blockchain" stocks couple years ago when companies would announce they're moving into block chain and the stock would rip.

Valuations and earnings are what always matter in the end. The general public and average person doesn't understand this. They look at price only and price history. When you do that, you have no idea what you're actually paying for that asset and don't understand the risk you're taking.

When you buy a candy bar, you know the value of the candy bar, what you're getting out of the candy bar and you can compare the candy bar to other candy bars and compare the prices to other places that sell the candy bar.

With BTC and other extremely speculative investments in brand new industries, John Q. Public is buying these things up blindly, and it almost always ends badly for them.
 
TheStateUofMS

TheStateUofMS

All-Conference
Dec 26, 2009
10,311
2,346
113
chem1970 said:
I have tried many investment vehicles, including Vanguard Funds which is excellent, but my favorite is T. Rowe Price. Highly rated family of funds, no load and low internal fees with outstanding customer service.

Considering your age I recommend dollar cost averaging every month, twice per month (e.g. on the 3rd and 18th of each month) in the following funds:

70% in the T. Rowe Price Blue Chip Growth Fund (TRBCX) a Morningstar 5* fund.
20% in the T. Rowe Price High Yield Fund (TUHYX)
10% in the T. Rowe Price Tax Free Income Fund provided you’re investing after tax dollars and not investing in a retirement account (PRTAX)

I have been putting my money in those funds for a long time. It’s very easy to open an account online at troweprice.com and start an automatic withdrawal from your checking account.
Click to expand...


I don't like this advice. Unless you're in a very high income tax bracket, stay away from muni funds. The yield is horrible compared to taxable bonds.

Research "tax equivalent yield." Easy formula.

There's a reason munis are for investors in high income tax brackets.

I wouldn't own any bonds until I was approaching 40 years old or unless I had zero tolerance for risk.

ETA: 20% in high yield is very risky. We're late in the business cycle. You're carrying a lot more risk than you realize being that heavily allocated to HY.
 
kired

kired

All-Conference
Aug 22, 2008
7,026
2,349
113
Do you plan on having kids? If so, just ignore everything in this thread --- you won't have anything to invest and will never be able to retire
 
C

Cap'n Geech

Redshirt
Aug 15, 2018
613
0
0
Exactly. Always invest an amount that you can afford to lose. If I'm right, I'm right in a big way. If I'm wrong, I'm wrong in a small way. It's Pascal's Wager.

Very smart (and rich) people have held a portion of their wealth in gold for thousands of years. Central banks are currently increasing their gold reserves. Few people think it's crazy to put a small portion of their portfolio in gold. Bitcoin takes the properties of gold as a store a value and improves upon them. It's a better version of gold. The market cap of gold is estimated to be over $8.4 trillion. If bitcoin captures just 5% of that market, 1 BTC will be over $20k. 10%, $40k, etc.
 
A

archdog

Redshirt
Aug 22, 2012
1,882
0
0
I would read a bunch on r/personalfinance on reddit. From personal experience, avoid paying a ton for your wedding. People will pressure you to spend spend spend. If you go into debt over it, it will take you years to climb back out.
 
Jeffreauxdawg

Jeffreauxdawg

All-American
Dec 15, 2017
8,840
7,825
113
kired said:
Do you plan on having kids? If so, just ignore everything in this thread --- you won't have anything to invest and will never be able to retire
Click to expand...

I have a few friends that insist $10k+ a year for travel ball for their 9 year old is a great investment...
 
C

CSpringsDawg

Redshirt
Aug 23, 2013
50
0
6
If you want to be a millionaire in 20 years, you have to be very smart with your money. In my opinion, get someone who knows the investment business unless that is your background. I may get flamed at this but listen to Dave Ramsey and follow his baby steps. I will also be a millionaire by the time I retire. If you have any debt, pay all of it off.

Step 1 - $1,000 (Emergency Fund)
Step 2 - Pay off all debts excluding home
Step 3 - 3-6 months of expenses in savings
Step 4 - 15% of your income into retirement
Step 5 - Save for kids college
Step 6 - pay off house
Step 7 - Party
 
TheStateUofMS

TheStateUofMS

All-Conference
Dec 26, 2009
10,311
2,346
113
With gold they key is having a small portion of the portfolio allocated to it (10% absolute max) and it's "Insurance" basically when it comes to gold. It does best in times of inflation, which there's not much now, but over time, it eventually does well. It's something that's very hard to time. William Devane, Rosalind Capital, etc, etc have all been telling folks to buy gold before the peak in 2011 and since the peak saying all the things you said (Banks increasing reserves) and also you get "smart people" saying to buy gold because of seasonal demand in India and global turmoil....there's ALWAYS global turmoil.

Generally speaking, commodities and gold should be about 5% of a portfolio for folks over 40 IMO.
 
TheStateUofMS

TheStateUofMS

All-Conference
Dec 26, 2009
10,311
2,346
113
Okay Dave Ramsey.

Dave Ramsey is good for people who have absolutely ZERO discipline.

Paying off your mortgage as fast as you can is NOT the fastest way to building wealth. You lose out on opportunity cost of investing in the market over the many years you spent putting extra on the mortgage. Most people don't stay in their home that long any more as well and the value of real estate goes in cycles.

The "baby steps" lol. some of what he says is so wrong and unethical I can't believe he's allowed to keep saying it, but he's great for people who can't control themselves, which there is a MASSIVE amount of these people. Dave Ramsey is good at brainwashing those people and does end up helping them, but if they followed disciplined and time tested money/investment management techniques, they would outperform Dave Ramsey's plan by a wide margin over the long run.
 
R

RBDog82

Redshirt
Sep 14, 2008
247
33
28
I agree that you should have some investments in liquid asset classes (stocks, mutual funds, cash, etc.), but don't forget about real estate as an investment as well. If the thought of being a landlord doesn't scare you, you can get strong returns in rental properties (SFR, multifamily, etc), great tax benefits and hopefully appreciation as well. Plus, with mortgage rates close to historical lows, it makes financial sense to lever up at 4% for as long as they'll let you.
 
D

Diggin Out Yo Wife

Redshirt
Jan 29, 2019
456
0
0
TheStateUofMS said:
Dave Ramsey is good for people who have absolutely ZERO discipline.
Click to expand...
Actually it's the opposite. Ramsey's plan only works for people once they've mastered discipline, i.e. the budget. If you can't say no to anything, Ramsey's plan won't work, no matter how many envelopes you use.

Please name me one thing Dave Ramsey says that is unethical.
 
J

johnson86-1

All-Conference
Aug 22, 2012
14,398
4,888
113
CommonSenseDog said:
Young and now have a lot of cash and want to start putting it to work to become a millionaire in 20 years. (Spend very little on frivolous things, dont eat out often, and only put around 12% of income towards housing)

. Is the best option just to throw it at an index fund and let it ride, paying into it at regular intervals. Any one of these better than another (VOO vs SPDR)? Or should I work with a manager?
Click to expand...

As long as you are working and don't have a good sized nest egg, you don't need a manager. Just throw it in stock index funds as the money becomes available. You don't need to worry much about rebalancing and keeping bond funds as your income sort of works like a bonds, providing a source of money to by more stocks when they are cheap, and this will also naturally rebalance within whichever stock funds/secctors you choose, as you will naturally be buying more of stuff that is cheap and less of stuff that is expensive if you keep your allocation the same. Assuming you have access to a regular or roth 401k/403b/etc, one thing you do need to do is spend a little bit thinking about what you foresee your income doing over time and what you think your retirement spending will be compared to your current spending. For most people, they won't have enough retirement income where the roth makes a lot of sense. Their marginal tax rate now is going to be higher than their marginal tax rate in retirement. Even if you are maxing out your tax deferred 401k/403b, maxing out a roth IRA will probably give you all the roth savings you need, unless you are going to be working and maxing out your tax deferred savings for a long time.

Once your next egg is up around 10 times your annual income or 20 times your annual savings, then it's probably time to start at least considering bond funds and also making sure you are rebalancing when you get out of whack.
 
You must log in or register to reply here.
Top Bottom