Help with investments.

[dja4260]

My wife and I have some money saved and I'd like to explore my options. This is money that wouldn't need to be touched until our later years/retirement.


Not sure if this helps but

-We both have pensions through our employers.
-30k max to start with.
-We both have 20+ years until retirement. (I'm 28, shes 27)

Thanks,

 

[CharBaby]

Pensions meaning 401K pension plans through your employere or company pensions?

If your employers also have 401K plans for their employees, shovel money into it!

 

[dja4260]

Originally Posted By: Char Baby
Pensions meaning 401K pension plans through your employere or company pensions?

If your employers also have 401K plans for their employees, shovel money into it!


TRS retirement. Teachers union. It's not a 401k otherwise I'd add as much as they matched....

 

[HardbodyLoyalist]

You should meet with a fee-only certified financial planner.

He'll discuss your long/short-term goals, make sure you're properly insured with respect to life/health/liability/disability, and then discuss appropriate investment strategies and asset allocation.

The couple of hundred dollars he/she will charge will pale in comparison to what you stand to lose by screwing it up trying to do it yourself.

 

[JHZR2]

The first thing Ill ask is how involved do you want to be with it? As in research, keeping track of this stuff, buying and selling, etc.

The second thing Ill ask is if your salary level allows you to invest in a Roth IRA, and if you are currently doing so.

If you are eligible for a Roth, Id take the first fraction of the money and open a Roth at a brokerage house like Ameritrade or E-trade. You can buy mutual funds, ETFs and stocks there to mirror any advisement you like. But the beauty of the Roth is that it will be tax free when you remove the proceeds in the future.

Beyond that we can drive this discussion however you like. But if you can do the Roth thing, Id start it tomorrow...

 

[Donald]

Your best bet is index based mutual funds, Vanguard has some excellent ones.

An index fund is based upon an index such as the S&P 500 (many others) and pretty much re-adjusts the holdings nightly to mimic the index.

This is opposed to a manager based mutual fund where a highly paid manager picks the stocks.

In most cases the manager cannot pick better performing stocks than the index and the fees are higher because of the manager.

Forget about picking individual stocks. In the long term you will do better with an index fund.

Long term investing should be boring. Look at your holdings every 6 months, not daily.

As you age, move some into bonds.

 

[Burt]

Put it in a Vanguard fund that invests in the total market and forget about it for 20 years. It should be worth about 6 times what you put in in 20 yers.

 

[gfh77665]

I respectfully disagree with Donald, to some extent. He is right about mutual funds vs. individual stocks. The index funds have their place, but with your long term time frame, Dividend yeilding, international, and growth funds will be the place to be.

Just look for low expense ratios, like RERFX, which charges a paltry 0.55, and VDIGX which has a ridiculously low 0.29% ratio
and a healthy 1.94 yield.

 

[bvance554]

Don't ask for investment advice on an internet forum. If you have a sum of money sitting around, seek out a professional. Or atleast ask for advice on an investment forum, not an oil forum.

 

[Kuato]

Originally Posted By: HardbodyLoyalist
You should meet with a fee-only certified financial planner.




Yes, discuss with a financial planner that is acting as your fiduciary.

If you would rather not, then finding a Roth IRA with no fees is a good place to start.

 

[cashmoney]

Four key concepts and you can do very well managing your own investments with very little drama.

1. Buy only low cost index funds
2. Make sure your investments are simple to manage but still diversified - see couch potato portfolio below
3. Re-balance the funds you own once a year - this just means move money between them to make them equal $ amounts once a year.
4. Most important - Be sure to dollar cost average your investing - that means make regular periodic investments of the same $ amount once a month no matter what is happening in the market.

To get started open a fund portfolio at a place like Vangard or Fidelity with 2-3 funds. Start with min but equal investment in each fund. Then add money to each fund every single month going forward. If the trade charges are onerous to add every month, maybe add quarterly instead. The key is to do it regularly and periodically without fail. Below are some examples of simple "couch potato" portfolios. You can google couch potato to learn more.

Couch Potato

1/2—Vanguard Inflation-Protected Securities (VIPSX)
1/2—Vanguard Total Stock Market Index (VTSMX)

Margarita

1/3—Vanguard Inflation-Protected Securities (VIPSX)
1/3—Vanguard Total Stock Market Index (VTSMX)
1/3—Vanguard Total Intl Stock Index (VGTSX)

 

[mattwithcats]

If you can get in it, TIAA-CREF is the way to go.

Roth IRA's are also a good investment.

If either you or your spouse's company offer a 401K, this also may be a way to go..
Comparison of 401(k) and IRA accounts
http://en.wikipedia.org/wiki/Comparison_of_401%28k%29_and_IRA_accounts

 

[jimbrewer]

Originally Posted By: dja4260
My wife and I have some money saved and I'd like to explore my options. This is money that wouldn't need to be touched until our later years/retirement.


Not sure if this helps but

-We both have pensions through our employers.
-30k max to start with.
-We both have 20+ years until retirement. (I'm 28, shes 27)

Thanks,


Easy. Go to Vanguard.com. Open an IRA. Dump it in an Index stock fund (at your age). If you want to get racy, pay an extra .25% management fee for a managed fund. Like Primecap. Throw away all your statements unopened for 7 or 8 years. Then recalibrate.

I'm perfectly serious. The most you can expect stocks to return is roughly 10% year in and year out. So the best thing you can do is keep costs down. A 1% management fee doesn't sound like much until you realize its 10% of your annual gain.

 

[walk23]

1. DRIP plans directly from individual dividend paying companies and reinvest all dividends to take advantage of compounding effects. Make equal monthly payments. Pick companies that have history of growing dividends over time. Often you get a built in discount on purchasing of at least 5 percent or more through DRIP plans.

 

[supton]

Not to veer off from the OP's thread, but what is a good place to start reading about this investing stuff? I've put this off for a long time, just living with a 401k; but now I'm at a point where I think have enough income to pursue investing. Unlike the OP though I'm not sure I want long term investments--I might want to cash out prior to retirement, to pay for weddings or college or house or ___. I could just start wandering around aimless on the web for background info; but before I even talk to a financial adviser I'd like to have some clue as to the terms used.

 

[JHZR2]

Originally Posted By: bvance554
Don't ask for investment advice on an internet forum. If you have a sum of money sitting around, seek out a professional. Or atleast ask for advice on an investment forum, not an oil forum.

There are some pretty darn smart and savvy folks on here who either actively invest or have the wisdom of many years to best explain the paths forward. None of this is rocket science or brain surgery. There is PLENTY of info out there for smart individuals to research and take in, and make decisions with, or at least to be smart consumers...

 

[gfh77665]

Don't just assume a "professional" always has your best interest at heart, and don't assume they are necessarily better than individual with a proven track record in their own life.

Some are great, some are a disaster, and I have encountered both. To a large degree, I have learned to trust myself.

 

[TWG1572]

I'd highly suggest checking out the Bogleheads forums. They are to index fund investing what BITOG is to oil. Very analytical, perhaps obsessively so, but a lot of good information for those starting off all the way to seasoned investors. I gave up on active fund investing a while ago, due in no small part to the resources they have available on their site.

Lots of good advice given on index fund investing so far. The first place you need to start is determining your risk tolerance. People will tell you you need to be aggressive because you are young, but you need to answer that question yourself. There is no single better way to completely obliterate your retirement savings than to get more aggressive than your personality will tolerate, then panic sell when the market drops. You need a sleep at night factor.

 

[Drew99GT]

Originally Posted By: cashmoney
Four key concepts and you can do very well managing your own investments with very little drama.

1. Buy only low cost index funds
2. Make sure your investments are simple to manage but still diversified - see couch potato portfolio below
3. Re-balance the funds you own once a year - this just means move money between them to make them equal $ amounts once a year.
4. Most important - Be sure to dollar cost average your investing - that means make regular periodic investments of the same $ amount once a month no matter what is happening in the market.

To get started open a fund portfolio at a place like Vangard or Fidelity with 2-3 funds. Start with min but equal investment in each fund. Then add money to each fund every single month going forward. If the trade charges are onerous to add every month, maybe add quarterly instead. The key is to do it regularly and periodically without fail. Below are some examples of simple "couch potato" portfolios. You can google couch potato to learn more.

Couch Potato

1/2—Vanguard Inflation-Protected Securities (VIPSX)
1/2—Vanguard Total Stock Market Index (VTSMX)

Margarita

1/3—Vanguard Inflation-Protected Securities (VIPSX)
1/3—Vanguard Total Stock Market Index (VTSMX)
1/3—Vanguard Total Intl Stock Index (VGTSX)




For the average person who has no knowledge of markets and doesn't want to do any active management, this is a good way to go about it.

However, I honestly believe some active management is quintessential to preserving your money most importantly, and getting the best average return. Most people who've been index fund investing for the last decade are roughly break even, give or take.

The easiest way to do active management in a minimal way, with the goal of capital preservation from bear market conditions, is to use the Ivy Portfolio approach. It basically is a strategy using 4 different asset classes, stocks, bonds, commodities, and real estate, and re balancing the portfolio based on a 10 month simple moving average.

http://www.advisorperspectives.com/dshort/updates/Monthly-Moving-Averages.php

http://www.amazon.com/gp/product/0470284...ASIN=0470284897

http://www.scottsinvestments.com/ivy-portfolios/


I'm doing something similar using ETFreplay.com relative strength which is a bit more active/buying/selling, but still not trading. All these approaches are rules based; there is no subjection involved.

 

[supton]

Originally Posted By: Drew99GT

However, I honestly believe some active management is quintessential to preserving your money most importantly, and getting the best average return. Most people who've been index fund investing for the last decade are roughly break even, give or take.


When you say "break even" do you mean they have stayed even (same dollar figure in there as they put in) or that they kept up with inflation (so a few percent per year growth)?