Investing/Stock Market Folks?

[LockedBreech]

At the age of 30, with my student loan defeated, most guns on my immediate wish list obtained, I finally had enough money lying around to start investing.

Much to my surprise, I am having an amazing time with it. Just like guns, there is so much to learn and so much that starts making sense once you learn how the gears of the system function. I understand it's like gambling to some degree, but it's gambling where you actually have a decent shot at beating the house.

My early portfolio is safety focused (some stable highly rated index and mutual funds with low management fees by T Rowe Price and Schwab as well as my Roth IRA) with about 20% of it in higher-risk, more aggressive EFTs and a couple of speculative stocks. I don't have a huge stake yet, just a few thousand, but I am looking forward to watching it grow and diversify for the 30-40 years I'm planning to work yet.

Any tips for an early investor or simply sharing of my enthusiasm? I always knew investing at some point would be smart. I did not expect it to be fun.

[Cheap Shot]

https://www.bogleheads.org/forum/search.php?search_id=active_topics&sid=613603fbf3aadd399a25076101d561bf

What PF is for shooting handgun's, Boglehead's is for investing. Highly recommend.

[GJM]

Buying equities is always fun when the market is going up.

[Rockey]

https://www.bogleheads.org/forum/search.php?search_id=active_topics&sid=613603fbf3aadd399a25076101d561bf

What PF is for shooting handgun's, Boglehead's is for investing. Highly recommend.

This. Ignore anything else. Learn the bogelhead way, everything else is just gambling. Keep costs low, buy the whole market, diversify, invest regularly, and stay the course.

[Crow Hunter]

This. Ignore anything else. Learn the bogelhead way, everything else is just gambling. Keep costs low, buy the whole market, diversify, invest regularly, and stay the course.

I want to +3 this.

I follow Mr. Larimore's 3 Fund portfolio. Very simple and easy to do.

What I do in order of importance as you get more cash:

-Fund your 401k/403b/457/etc to the match
-Max your HSA (if you have one)
-Max your Roth IRA contribution
-Max your 401k/403b/457/etc
-Invest in broad market tax efficient mutual funds or pay off your house

You are already a leg up by having your student loans paid off.

[LtDave]

I have been investing for 40 plus years.

I believe in buy and hold.
I much prefer buying individual stocks vs mutual funds. I have some mutual funds but haven't put any additional money in any in some time.
Buy companies whose products you use and like. Ideally ones with a good dividend return. Companies that actually make money.
Keep sufficient cash on hand to take advantage of buying opportunities.
Diversify. Do not put all your eggs in one market segment.
You only have to hit it big on one or two stocks to make a lot of money.
Real estate is another excellent place to earn a decent return on your money and potential long term capital gains. Take a look at triple net (NNN) commercial property. Commercial property rentals have much less tenant drama than residential rentals.

[BehindBlueI's]

I'd recommend this book: https://www.amazon.com/Truth-About-Money-4th/dp/0062006487/ as a place to start. It's a good foundation for personal finance.

Individual stock picking is risky and a lot of work. I took the accouting classes in college to be able to look at a company's books and figure out their financial picture, but it's real work. Time consuming, and something you have to do routinely. I don't buy many individual stocks because of the time sink, and because it's rarely worth long term vs ETFs and mutual funds. Figure it's more of a hobby then the main focus of my retirement strategy.

I am a fan of buy-and-hold on stocks with safe dividends. As an example, power companies and utilities aren't sexy and won't rocket in value, but are generally steady earners. My goal is passive income to supplement my pension. Part of developing a strategy is developing your goals and time lines. How much risk you're willing to tolerate, etc.

[SteveB]

https://www.dropbox.com/s/5tj8480ji58j00f/If%20You%20Can.pdf?dl=0

[pangloss]

Bogleheads is a great forum. I was active there for several years and the people there during that time were super helpful. The most important decision to make is what your asset allocation will be. Once you decide, then implement that plan using the lowest cost mutual funds or ETFs that you can find. The other alternative is to put everything into a Target date account that becomes more conservative as you age.

It's much much easier to become a good investor than a good shot with a pistol, but I make a big distinction between investors and speculators.

The Intelligent Asset Allocator by Bernstein is the best investing book I've ever read. Lucky for me it was also the first. The Random Walk Guide to Investing by Malkiel is also very good and less technical.

Sent from my Moto G Play using Tapatalk

[Guerrero]

I want to +3 this.

I follow Mr. Larimore's 3 Fund portfolio. Very simple and easy to do.

What I do in order of importance as you get more cash:

-Fund your 401k/403b/457/etc to the match
-Max your HSA (if you have one)
-Max your Roth IRA contribution
-Max your 401k/403b/457/etc
-Invest in broad market tax efficient mutual funds or pay off your house

You are already a leg up by having your student loans paid off.

This

[blues]

Another boglehead fan here. I've been on the site for about 10 years. (Also a big fan of boglehead contributors Swedroe and Bernstein.)

Bought my first mutual fund in about 1984 when my father asked me to do some research and see what fund I thought I should invest in for my IRA and then we would compare notes. Strangely enough, we came up with the same fund.

I didn't get serious about investing until 1987 when I got married and figured that I had a fiduciary responsibility to make my wife's (and my) life as comfortable as I reasonably could without sacrificing quality of life along the way.

Went through the usual stock picking, buying and selling that many of us go through and found myself simplifying and paring things down over the intervening years. Currently, while we have several accounts, (taxable, Roth, traditional IRA etc), the investments are housed in a total of four funds plus the federal government's TSP.

Being that I'm retired and have adequate income for the years ahead via pension and investments, I've lowered the risk (equity) portion of our portfolio significantly as I no longer need to take on additional risk. The late great Benjamin Graham recommended no less than 25% of a portfolio be invested in equities, however.

(Swedroe has some great articles on the "marginal utility of wealth" and the "need, ability and willingness to take risk". I highly recommend reading these. I also highly recommend Bernstein's writing about taking money off the table when you've "won the game".)

My investing these days is very easy to keep up with and much of it is nearly on auto-pilot. No heavy lifting required.

Simple is good.

My advice to those youngsters here on the board is to start early and let time be your ally. Investing in a total market mutual fund like VTSAX along with a portion in bonds, (VBTLX), will go a long way to getting you down the road to financial security.

(You should also at least consider investing in international funds, and possibly in all-in-one funds (https://investor.vanguard.com/mutual-funds/all-in-one-funds) that do it all for you without the need to re-balance on your own. Vanguard's LifeStrategy and Target Retirement Funds are excellent in this regard.)

ETA: Invest in your funds as often as you can. Make it a "pay yourself first" kind of thing. Fill up your tax advantaged plans first and then put what you can in taxable accounts. Don't let market ups and downs keep you from investing for the long term. Stick to your guns and you will be amazed what time and discipline will accomplish.

[2xAGM114]

FutureAdvisor.com

I love FA, have been using it for about three years. It looks at your entire portfolio as a whole and recommends funds based on expense ratios, management fees and taxes. Then it leverages your holdings against each other to end up with the highest combined yield. FA isn't a brokerage itself but they buy/sell your VanGuard, Fidelity or other accounts on your behalf.

[RyanM]

Consistent investing in the market (not individual stocks) regardless of how the market is doing is the key i.e., keep socking away money each month like clockwork and you'll do well over the long term. The people who don't do this or only invest when things are "good" are the ones who will never get there.

[Darth_Uno]

At the age of 30, you're still young enough to go after more aggressive stocks and be able to ride out any hits. In fact, most target retirement mutual funds do just that (the Vanguard 2045 for example). It's aggressive now and will shift towards safer investments as it gets closer to 2045. I have about 1/3 of my funds invested in this (actually my entire Roth) because it's the long term set-it-and-forget-it easy button.

[Duces Tecum]

https://portfoliocharts.com/

[LockedBreech]

Another boglehead fan here. I've been on the site for about 10 years. (Also a big fan of boglehead contributors Swedroe and Bernstein.)

Bought my first mutual fund in about 1984 when my father asked me to do some research and see what fund I thought I should invest in for my IRA and then we would compare notes. Strangely enough, we came up with the same fund.

I didn't get serious about investing until 1987 when I got married and figured that I had a fiduciary responsibility to make my wife's (and my) life as comfortable as I reasonably could without sacrificing quality of life along the way.

Went through the usual stock picking, buying and selling that many of us go through and found myself simplifying and paring things down over the intervening years. Currently, while we have several accounts, (taxable, Roth, traditional IRA etc), the investments are housed in a total of four funds plus the federal government's TSP.

Being that I'm retired and have adequate income for the years ahead via pension and investments, I've lowered the risk (equity) portion of our portfolio significantly as I no longer need to take on additional risk. The late great Benjamin Graham recommended no less than 25% of a portfolio be invested in equities, however.

(Swedroe has some great articles on the "marginal utility of wealth" and the "need, ability and willingness to take risk". I highly recommend reading these. I also highly recommend Bernstein's writing about taking money off the table when you've "won the game".)

My investing these days is very easy to keep up with and much of it is nearly on auto-pilot. No heavy lifting required.

Simple is good.

My advice to those youngsters here on the board is to start early and let time be your ally. Investing in a total market mutual fund like VTSAX along with a portion in bonds, (VBTLX), will go a long way to getting you down the road to financial security.

(You should also at least consider investing in international funds, and possibly in all-in-one funds (https://investor.vanguard.com/mutual-funds/all-in-one-funds) that do it all for you without the need to re-balance on your own. Vanguard's LifeStrategy and Target Retirement Funds are excellent in this regard.)

ETA: Invest in your funds as often as you can. Make it a "pay yourself first" kind of thing. Fill up your tax advantaged plans first and then put what you can in taxable accounts. Don't let market ups and downs keep you from investing for the long term. Stick to your guns and you will be amazed what time and discipline will accomplish.

Great post, thanks Blues. Today was payday so I dropped another $400 in my Roth.

I have wanted to jump into those Vanguard indexes for a bit, but their minimum buy-in is $3,000. So I chose two lower-entry Vanguard and Schwab indexes. (Vanguard international index and schwab 1000 index etf)

[LockedBreech]

At the age of 30, you're still young enough to go after more aggressive stocks and be able to ride out any hits. In fact, most target retirement mutual funds do just that (the Vanguard 2045 for example). It's aggressive now and will shift towards safer investments as it gets closer to 2045. I have about 1/3 of my funds invested in this (actually my entire Roth) because it's the long term set-it-and-forget-it easy button.

Okay, I might need a little education here.

I manage my investments through Charles Schwab (also my checking bank, very convenient and easy to transfer that way and I find it very user friendly). I have my Mutual Funds (x3 at this point), ETFs (x2 at this point), Equities (1x at this point), and my Roth Contributory IRA.

How could an IRA be a PART of a Mutual Fund? Schwab categorizes them separately.

[blues]

Okay, I might need a little education here.

I manage my investments through Charles Schwab (also my checking bank, very convenient and easy to transfer that way and I find it very user friendly). I have my Mutual Funds (x3 at this point), ETFs (x2 at this point), Equities (1x at this point), and my Roth Contributory IRA.

How could an IRA be a PART of a Mutual Fund? Schwab categorizes them separately.

LB, I don't understand the question. Maybe you can clarify?

You can have various investments in your Roth or traditional IRA account...mutual funds, CDs, individual stocks or bonds (if you have a brokerage account with Schwab or Vanguard or whoever you invest with), etc.

The IRA / Roth can be invested in more than one vehicle. Like multiple funds, or funds and individual stocks / bonds or combination thereof.

I know I'm missing something so hopefully you can explain.

[LockedBreech]

LB, I don't understand the question. Maybe you can clarify?

You can have various investments in your Roth or traditional IRA account...mutual funds, CDs, individual stocks or bonds (if you have a brokerage account with Schwab or Vanguard or whoever you invest with), etc.

The IRA / Roth can be invested in more than one vehicle. Like multiple funds, or funds and individual stocks / bonds or combination thereof.

I know I'm missing something so hopefully you can explain.

You're not missing anything, I'm just a moron, I think. I thought the Roth could only be funded through cash contributions. I started my Roth with Schwab on my phone. though I am not sure if their Roth Contributory IRA is different than a normal Roth IRA. My Roth Contributory IRA has been funded entirely with transfers directly from my paycheck/checking account. How would that allow for the maximum contribution of $5500? Wouldn't it constantly fluctuate if it was funded with equities/funds?

[blues]

You're not missing anything, I'm just a moron, I think. I thought the Roth could only be funded through cash contributions. I started my Roth with Schwab on my phone. though I am not sure if their Roth Contributory IRA is different than a normal Roth IRA. My Roth Contributory IRA has been funded entirely with transfers directly from my paycheck/checking account. How would that allow for the maximum contribution of $5500? Wouldn't it constantly fluctuate if it was funded with equities/funds?

It doesn't matter what the underlying value of the investment is...whether it fluctuates higher or lower. The $5500 limit is simply how much you can contribute in total on an annual basis. The year end value may be significantly higher or lower than your personal investment from your bank, paycheck or mailed in contribution.

You can purchase equities or funds, CD's or individual bonds with the money you put into the Schwab Roth account.

You may also be able to transfer other IRA / Roth from another investment company to Schwab. But that transfer would ordinarily be the cash value as opposed to the investment vehicle itself under most circumstances.

[LockedBreech]

It doesn't matter what the underlying value of the investment is...whether it fluctuates higher or lower. The $5500 limit is simply how much you can contribute. The year end value may be significantly higher or lower than your personal investment from your bank, paycheck or mailed in contribution.

Wait, so I can contribute $5500 in Mutual fund cost basis to my IRA, and if that mutual fund does super well, my IRA might have more than that at the end of the year?

Looking at the Schwab interface, I am now seeing what you mean. I can fund my Roth with a diverse array of instruments just like my main brokerage account.

This changes everything, and is awesome! Thanks blues!

I love the feeling of learning new stuff.

[blues]

Wait, so I can contribute $5500 in Mutual fund cost basis to my IRA, and if that mutual fund does super well, my IRA might have more than that at the end of the year?

Looking at the Schwab interface, I am now seeing what you mean. I can fund my Roth with a diverse array of instruments just like my main brokerage account.

This changes everything, and is awesome! Thanks blues!

I love the feeling of learning new stuff.

LOL! You're more than welcome. Let's just say that on January 1, (to make it simple), you sent a check to Schwab for $5500 in the P-F Fund in your Roth Account.

The market has a good year and goes up 15%. The year end value would be $6325. You can fund it all at once or in drips and drabs until you reach the annual contribution limit. (The choice of what investment vehicles you want the Roth to hold is up to you. And, you can have Roth accounts elsewhere but your total annual contribution is limited to the $5500 regardless of how you decide to divvy it up.)

[LockedBreech]

LOL! You're more than welcome. Let's just say that on January 1, (to make it simple), you sent a check to Schwab for $5500 in the P-F Fund in your Roth Account.

The market has a good year and goes up 15%. The year end value would be $6325. You can fund it all at once or in drips and drabs until you reach the annual contribution limit. (The choice of what investment vehicles you want the Roth to hold is up to you. And, you can have Roth accounts elsewhere but your total annual contribution is limited to the $5500 regardless of how you decide to divvy it up.)

I think I will probably start using indices rather than my pure cash contributions. More growth potential.

Good stuff. Fun thread so far, y'all are a bit further along in this than me.

[LockedBreech]

Can't thank ya enough Blues, I just re-funded the Roth using primarily a good growth index etf. Knowing I have this kind of flexibility with my Roth will help a lot.

[blues]

Can't thank ya enough Blues, I just re-funded the Roth using primarily a good growth index etf. Knowing I have this kind of flexibility with my Roth will help a lot.

Glad to help. Hit me up anytime.

I'm partial to total market funds these days, rather than trying to divide the market into various sectors...or small cap, mid cap, large cap, etc.

(Which is not to say that it's the right way. There are "many roads to Dublin" as the aforementioned Taylor Larimore likes to remind us on the boglehead forum.)

[farscott]

I am going to be a bit of a naysayer and suggest that most individual investors do not hold well-diversified portfolios, especially those with mutual funds. People need more than just equity holdings, and debt holdings are where I make most of my investing gains. I strongly suggest any small investor get a TreasuryDirect account and learn about the US Treasury market. From there, one can branch out into corporate, municipal, and sovereign debt.

The advantage of TreasuryDirect is the product is the safest and most liquid investment on the planet, US sovereign debt. The Department of the Treasury runs TreasuryDirect and allows investments in any multiple of $100 up to limits that most will not be able to exceed. Everything from 28-day T-bills to 30-year Treasury Inflation-Protected Securities (TIPS) are offered. Even Savings Bonds can be bought. All transactions are free as long as the instrument is held to maturity. There is a wealth of knowledge on the website.

https://www.treasurydirect.gov/indiv/indiv.htm

[Crow Hunter]

The afore mentioned 3 fund portfolio.

https://www.bogleheads.org/wiki/Three-fund_portfolio

Mr. Larimore

https://www.bogleheads.org/wiki/Taylor_Larimore

While it isn't mentioned here, Mr. Larimore was at Bastogne with the 101st. Not only is he a hero, he is a font of information and experience about investing.

[blues]

I am going to be a bit of a naysayer and suggest that most individual investors do not hold well-diversified portfolios, especially those with mutual funds. People need more than just equity holdings, and debt holdings are where I make most of my investing gains. I strongly suggest any small investor get a TreasuryDirect account and learn about the US Treasury market. From there, one can branch out into corporate, municipal, and sovereign debt.

The advantage of TreasuryDirect is the product is the safest and most liquid investment on the planet, US sovereign debt. The Department of the Treasury runs TreasuryDirect and allows investments in any multiple of $100 up to limits that most will not be able to exceed. Everything from 28-day T-bills to 30-year Treasury Inflation-Protected Securities (TIPS) are offered. Even Savings Bonds can be bought. All transactions are free as long as the instrument is held to maturity. There is a wealth of knowledge on the website.

https://www.treasurydirect.gov/indiv/indiv.htm


I had an account there for myself, and one for my wife for years. (Primarily I Bonds.) It finally drove me off with some of its issues and I know, if and when I pre-decease my wife, she'd not want to deal with it.

I agree that debt should not be overlooked. And truth be told, between the G Fund and other debt, at this point in my life I am much more invested in debt than equities.

[Duces Tecum]

I'm just a moron

Perhaps, LockedBreech, but you come across as simply a new-investor-in-training, an investing white belt ("What should I do?"). What other folks have written (above) will get you through the white belt level quite nicely.

The yellow belt folks who start investing early are in the sweet spot: "For years I had a traditional 60/40 stock/bond portfolio with reasonable returns and a low standard deviation. I kept investing the same percentage of my income every payday, re-balancing annually, and it worked!"

It's the green belt guys who get into trouble: "Read this, Henrietta. It's a course that says we can get richer, quicker with naked options!"

[blues]

It's the green belt guys who get into trouble: "Read this, Henrietta. It's a course that says we can get richer, quicker with naked options!"

Speaking of losing your pants...

[Darth_Uno]

Glad to help. Hit me up anytime.

I'm partial to total market funds these days, rather than trying to divide the market into various sectors...or small cap, mid cap, large cap, etc.

(Which is not to say that it's the right way. There are "many roads to Dublin" as the aforementioned Taylor Larimore likes to remind us on the boglehead forum.)

I thought I posted this earlier, so here we go again.

First, thanks Blues for posting all that about Roths. Saved me a bit of typing. :D

Second, speaking to nobody in particular, nearly any total market fund will pay off if you hold it long term. That’s a gross oversimplification but generally true. I myself have about 1/3 in Vanguard Target 2045, and another 1/3 in a 500 index. If you don’t know or want to know jack squat about investing and just bought more of the same total market or sector (large, mid, small) mutual fund every year, you’d likely come out ahead.

I have other stocks I dabble in as a dilettante semi-hobby, which I’ve done well enough on...due more to the long bull market than any savvy on my part. I’d be fine selling them all today and cashing out as I don’t consider them true long term investments. For the two mutual funds, I intend to keep buying them with my Roth’s, “let it ride” and cash in my millions when I retire. :cool:

[OnionsAndDragons]

I don’t have much that hasn’t already been said. I keep my 401k matches capped, rebalance at least 2x a year based on moderate research and passive news observation, pull everything into stable assets if I believe serious weirdness is on the horizon.

I don’t do the same with my IRA though. I’ve done most of my financial gambling inside that account. Usually what I contribute to that is actual extra in the last quarter, so I have treated it more disposable. I’ve done pretty well with that. If I make a bet and it doubles, I’ll pull back at least half the original investment if I think the investment is still promising, or more if I’m not so rosy on it. I then take a portion of that and stick it into a conservative fund where it stays forever.

I like to have a designated area in my finances to take a shot from if I like the look of something, without involving my bedrock retirement assets. I’ve been a professional gambler in the past, but I’m not interested in dedicating professional investor time in managing my stuff. But, any one of us that puts some research in will come across an idea once in a while, and I like my life better when I can explore those if I feel the desire.


Sent from my iPad using Tapatalk

[blues]

I sent a PM earlier to Taylor Larimore to mention that his (well deserved) fame and notoriety is appreciated here on P-F.

(I've corresponded with him a handful of times over the years. Unfortunately, I never knew when I lived in South FL that he resided just a couple of miles away.)

Taylor was very grateful for the kind words expressed on his behalf and I just wanted to share that here.

[LockedBreech]

I sent a PM earlier to Taylor Larimore to mention that his (well deserved) fame and notoriety is appreciated here on P-F.

(I've corresponded with him a handful of times over the years. Unfortunately, I never knew when I lived in South FL that he resided just a couple of miles away.)

Taylor was very grateful for the kind words expressed on his behalf and I just wanted to share that here.

That’s pretty darn cool!


Sent from my iPhone using Tapatalk

[CSW]

I have been investing for 40 plus years.

I believe in buy and hold.
I much prefer buying individual stocks vs mutual funds. I have some mutual funds but haven't put any additional money in any in some time.
Buy companies whose products you use and like. Ideally ones with a good dividend return. Companies that actually make money.
Keep sufficient cash on hand to take advantage of buying opportunities.
Diversify. Do not put all your eggs in one market segment.
You only have to hit it big on one or two stocks to make a lot of money.
Real estate is another excellent place to earn a decent return on your money and potential long term capital gains. Take a look at triple net (NNN) commercial property. Commercial property rentals have much less tenant drama than residential rentals.

^^
All of this.

I've been doing it for 30 years.
Stay the course, don't be afraid to get aggressive.

I'm thinking that the cannibus industry is going to be the next 'BIG THING'.