I am looking for some investment advice. A little about me im @29 just started work couple of years back earning 58k per year.Used all my savings this year to do a 20% down and get a house. Have a 3k balance on CC which has no apr till end of next year and 4k in savings.My company does not do 401K . So currently I have zero investments.I am looking for something to invest in on a monthly basis would be comfortable investing upto 600 per month. Any advices on how to start or any good ideas that helped u guys build your wealth.
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Account type. For the first $5500/yr, you’ll probably want to pick between Roth IRA and Traditional IRA. Since you have very little saved right now, a Roth could also function as an emergency fund. If you’re a W-2 employee (as opposed to a 1099 contractor), you don’t have any other options for a retirement account, so any additional money (above the $5500/yr) could go into a regular taxable brokerage account. If you’re 1099, you could consider SEP IRA (maybe even instead of or in addition to Roth, although I don’t recall the rules).
Investment allocation. Start (and quite possibly finish) with a Lazy Portfolio. Use ETFs (instead of mutual funds) where possible, since they don’t have a minimum and have the same low expense ratios as the cheapest mutual funds.
Brokerage. If you follow a Lazy Portfolio approach, it’s probably easier at Vanguard.
And you really should have a bigger emergency fund than $4K. If you lose your job, you could lose your house pretty quickly after that.
I would save up 6-12 months of living expenses in a liquid savings account first and then contribute to a Roth or Traditional IRA. Agree with scripta on everything else.
I like to keep it simple.
I suggest an IRA account with Vanguard, either Roth or traditional and investing in a Vanguard Target Fund.
You’d need to start that off with $1000 and then you can invest what you want periodically up to a total
of $5500 annually.
Your cash savings is light, especially if we net out the $3000 you owe on the card, so that needs attention too.
Thank you all…i am working on the emergency fund currently am putting of 500 a month in my savings acct.
@Scripta when u say regular taxable brokerage account what are the options? I would like to invest in something like these / Roth IRA till my nest egg is built.
Fidelity and Schwab are good firms to consider also. You can hold retirement accounts and brokerage accounts at the same firm, if you like. Think of a taxable brokerage account as being similar to a bank account, but you can buy investments (mutual funds, ETFs, stocks, bonds, CDs) instead of just having a big pile of money sitting there earning a low fixed rate.
Thank u @gwraigty, Do u know which one has the least operating costs for ETF’s/Mutual funds.
Depends. Vanguard’s ETFs/MFs are free to trade at Vanguard, Fidelity’s are free to trade at Fidelity, etc. Many brokerages have their own lists of no-fee ETFs/MFs.
The big three (Schwab, Fidelity, and Vanguard) all have equivalent choices for index funds.
The expense ratios are all equally comparable hovering around 0.03% to 0.06%
(30 cents to 60 cents annually for every $1000 invested) and absurdly cheap compared to the common ~1.00% seen in actively managed funds ($10 per year for ever $1000 invested)
For me i’d either go with Schwab to get access to their Debit card with worldwide free ATM’s or Vanguard because they are “investor-owned” and not primarily profit driven. I choose Fidelity when I initially started because I wanted their 2% Cash back card, but there’s a lot more options for 2%+ cards recently so it’s not as valuable of a perk. Never had any problems with their brokerage and would highly recommend them too.
Fidelity also has a Cash Management Account with worldwide free ATM feature.
*Fidelity Check Card has a 1% Foreign Transaction Fee (FTF), while the Charles Schwab Debit Card doesn’t.
Only if you use it as a debit card. There’s no FTF at ATM – $0 0%. I don’t remember if they reimburse ATM fees imposed by the ATM operator, so you’ll need to find an operator that doesn’t charge fees.
And you really don’t want to use a debit card when traveling. Or even when not traveling.
Oh that’s pretty awesome, i’ll try it next time I’m travelling, was planning on opening a schwab for the debit card, but wanted to wait for a big public bonus.
At Fidelity, you have to be logged in to see their offerings.
I’m not too experienced with ETF’s/Funds. I mainly invest in individual bonds. One of them might have a branch office near you, if you’d find that to be a plus. Check for branch locations on their websites.
Thank You Guys…
So my target is to fund 5500 to IRA (plenty of time till april 18)
and atleast 1k to brokerage account investing ETF’s
We use both Fidelity and Vanguard. Fidelity has the nice advantage that you can basically have all of your banking/financial accounts there. As others have said, they offer free ATMs worldwide, ATM fee reimbursements, and competitive mutual fund/ETFs. We use them as our primary “bank” and they hold the majority of our retirement savings. Local branches are also nice for the occasional time you need help with something. They do lack two things:
- A competitive high yield savings account/mutual fund (we use Ally for cash savings)
- Target allocation funds that have low expense ratios
I think the target allocation funds are nice for people with lower investment amounts as they can give broad exposure to a variety of mutual funds without requiring the minimum payments (usually $2500/fund) or subsequent reallocations. Vanguard has a nice set of these and their expense ratios (0.15% or so) are substantially lower than Fidelity’s (0.7%) or Schwab’s (0.6%).
Is there gonna be any impact on ETFs or mutual funds with the possible new tax bill.
Wow this would suck for tax loss harvesting and also appreciated stock charitable contributions. I would bet it wouldn’t be a part of an actual bill, due to the people doing the voting.
Also, if that passes there might be a whole new class of wash-like sales to track if someone has more than one account (with the “gains” washing instead of just the losses). Not to mention washing from a retirement account (the losses disappear when washed to the retirement account, so possibly the gains would also wash the other way and multiply).