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|| SportsShooter.com: Member Message Board
OT- Investment Advice for Noobs
Greg Kendall-Ball, Photographer, Assistant
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Abilene | TX | USA | Posted: 12:04 PM on 03.31.11 |
->> First, I definitely plan on consulting a professional, but I thought I'd throw this out there and get some feedback, so I don't walk into their office like a sheep into the slaughterhouse...
That being said, for the first time in our lives, my wife and I are both out of school, making enough money to cover all our bills, and still have a little left over. We've stayed out of credit card debt, and currently have a mortgage, two car payments, and student loans that we're paying off.
We both have 403/401 accounts with a little in them from when we both worked for a local university. They're just sitting there at the moment. We both have new 401 accounts through our current jobs, which we're paying into, but I'm starting to think about a Roth IRA or some similar vehicle.
I'm 32, she's 30...no kids, no plans for kids, and I don't plan on being wealthy, but I don't want to be a 65-year-old homeless guy.
So, you wise old sages, what say you? Roth IRA? Start playing the stock market a little? Chuck it all in CDs or money market accounts?
What strategies or rules of thumb would you folks recommend? |
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Scott Morgan, Photographer
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Rockford | IL | United States | Posted: 12:19 PM on 03.31.11 |
->> Definitely start a Roth IRA. You can put in up to $5000 per year of after tax money. When you retire, all your earnings are tax free. Since you have 30 years for that to grow, that will be a lot of money you won't get taxed on. Also, if something extreme happens, you can get the original investment out (not earnings) without penalty or taxes.
You can also roll your old 401/403 accounts over into your Roth, but you'll have to pay taxes on that money. You get the same benefit of tax free earnings after 30 years of growth though. If you think about doing this, make sure you can cover the taxes with other money. Otherwise you'll pay a penalty.
You could go with a traditional IRA, but odds are you aren't in a very high tax bracket, so you're only saving a little now, but you'll pay more in the future.
The rule of thumb I've always heard is to max out whatever match you have available to you on your 401/403. So if they match 50% of up to 6%, at a minimum, do that. Max out your Roth, and if you can, add more to your 401/403 allotment. Shoot for 15-20% of total earnings for savings.
I'm not going to comment on where to invest the money, although if you do plan on investing in individual stocks, I would do that with money you don't mind losing. Say 10% of your total savings. Index funds, though boring, beat professional investors over time since their fees are so low. Also, avoid funds with Loads. |
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Jim Colburn, Photo Editor, Photographer
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McAllen | TX | USA | Posted: 3:37 PM on 03.31.11 |
->> "What strategies or rules of thumb would you folks recommend?"
Travel back to 1980 or so and buy lots of Apple stock.
Failing that sink as much as you can into an IRA and if you have access to a 401K put as much as you can into that.
Pray. |
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Scott Morgan, Photographer
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Rockford | IL | United States | Posted: 9:10 PM on 03.31.11 |
->> Jim, you wouldn't need to go back to the 80's to get rich investing in Apple. At the start of 2004, AAPL was at around $10. It closed today at $348.
An interesting blog for people interested in finance is http://www.getrichslowly.org/blog/ . It seems especially good for those who are not good with money or are in debt. They have lots of advice. Also, APM's Marketplace and Marketplace Money are good resources for market news. |
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Gene Boyars, Photographer
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Matawan | NJ | United States | Posted: 9:22 PM on 03.31.11 |
| ->> FYI, that $348 is after a 2 for 1 split a few years ago so the real value of that one share is $796 |
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John Germ, Photographer
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Wadsworth | Oh | USA | Posted: 10:47 AM on 04.01.11 |
| ->> Every raise you get, put 1/2 of it into your 401k (if you have it) or IRA if you don't. It's easier to save money if you never get used to spending it. You want to be saving at least 10% of your income at a minimum although 20% is better. But the best advice is to increase the amount with every raise until you reach the threshold your financial adviser and you work out for your situation. |
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Scott A. Schneider, Photographer
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Minneapolis | MN | USA | Posted: 12:31 PM on 04.01.11 |
->> If you want to get rich quick, go all in with stocks, but keep in mind you could also lose most of it. (Home run hitters also strike out a lot.) It depends on how much risk you can handle, which really means how much loss you can tolerate. CDs and money market funds are not a good alternative now since interest rates are so low. For relatively safe, long-term growth, Vanguard index funds are hard to beat, and they could be in a Roth IRA. Some investment folks say that your first $10k should be in index funds; then individual stocks might be worth considering.
This is a long thread but worth reading for newbies: http://www.bogleheads.org/forum/viewtopic.php?t=10413&postdays=0&postorder=...
Regarding Apple stock: it could have been purchased for $78 a share in January of 2009. |
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Ronnie Montgomery, Photographer
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Jim Pierce, Photographer
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Waltham | MA | USA | Posted: 8:56 PM on 04.03.11 |
->> Greg,
In my eye if you are maxing out your 401K and still able to save some. I would invest in YOURSELF. By this I mean go and take classes on something that will expand your resume/marketabilty, maybe another degree, or a certificate in Finance/marketing/public speaking/etc... something that will make you worth more to potential employers OR more able to work for yourself which has its issues but very rewarding.
You are young, so max out the 401k's and save some for a rainy day but DON"T stop learning. My first job out of college, Engineering 1991, basically told us you are "john Smith Inc". meaning you are your own company and you need to stay up to speed and learn what is needed in the market you are in, today and for tomorrow. The days of one job are over you need to keep learning and adpating.
You can never stop advancing your knowledge. Steve Jobs spoke at Standford a few years ago and I go back to his speech many times, very motivational.
It can be heard on you tube and other sites just search Steve Jobs Stanford and you will find it many places.
Jim |
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Israel Shirk, Photographer, Assistant
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Boise | ID | US | Posted: 10:49 PM on 04.03.11 |
->> Once you have a decent buffer/life insurance, get rid of debt first. Things like car payments, mortgage, etc. The interest on them is far higher than what you're going to get from anywhere else.
The house is great to pay off because you end up being able to sell it at the end, and paying a few percent a month extra can sometimes end up cutting you from doing house payments for 30 years to house payments for 15 years. But don't consider it an investment if it's not well-insured and set up to increase in value over time. |
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Philip Johnson, Photographer
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Garland | TX | USA | Posted: 12:18 PM on 04.04.11 |
->> I would roll what you have in those old 401K's into either an IRA or Roth IRA, but again that depends on what kind of a return you are getting currently. But if you roll them over you will have more control and options to do different things with the money.
Definitely find a broker that has your same financial philosophy. There are some real duds that are good salesman, there are some that are just average, and there are some very good brokers to work with that will make your money grow over time. Go interview with 5 or more and find one that you are comfortable with. There are tons of radio shows on investing that you can increase your knowledge with. You may want to do Stocks, mutual funds, or annuities. It all depends on what you are comfortable with. |
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Philip Johnson, Photographer
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Garland | TX | USA | Posted: 1:11 PM on 04.04.11 |
| ->> Greg, here is a good book you should get, The Intelligent Investor: A Book of Practical Counsel. It will give you good information to think about. |
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Eric Dituri, Photographer
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Clovis | CA | USA | Posted: 2:43 PM on 04.04.11 |
| ->> Check out Vanguard's low-cost, no-load mutual funds. Roth IRA's are great. Specifically, take a look at Vanguard's Target funds (they get more conservative as your retirement year gets closer). I would merely pick an amount to invest each month and stick to it (maybe have it come out of your checking account automatically like I do). Basically this puts things on auto-pilot and avoids trying to guess the ups and downs of the stock market. You may not hit a lot of homeruns this way, but over time you should hit enough singles that you should be okay. You're very lucky in that you have a long timeline before you will be considering retirement. That will allow you to ride out the ups and downs of the market. Good luck. |
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