The Investment Thread!

[lordxizor]

I think I asked this somewhere else, but curious to get all you money-lovers' opinions here....

What income would be required to accomplish the following goals?
1) Living in TN
2) maxing out tax-advantaged retirement accounts
3) saving for x kids' full college path (including graduate degrees)

I would start with what you think you need to live on after paying for 2 and 3. If you think $50k is enough to have a modest home and live the lifestyle you want to live, then work from that. Number 3 is a big wildcard too. I have no idea how much money you'd have to put away monthly to accomplish that. Personally I wouldn't pay for my kid's grad school or 100% of their undergrad, but that's just me. Let's use $250 a month for illustrative purposes.

$50k living expenses
$19.5k 401k max-out
$6k IRA max out
$3k college savings (assuming one kid)

That's $78.5k after taxes, assuming you're doing a Roth 401k and Roth IRA. So roughly $100k before taxes.

That's going to be tough to save that much money and maybe to make that much depending on what you do and how experienced you are. And honestly instead of blindly maxing out both your 401k and IRA, you should determine at what age to you want retire, how much retirement income you think you'll need, and determine what you need to save to get there. Especially if you're young, it may be far less than you'd think.

For example, I recently starting working with a financial advisor and he gives you "your number" as part of the initial onboarding. I'm 39 with $270k already invested for retirement. To reach my goal of $70k of income in retirement I'd only have to save $2,066 annually to retire at 65, $6,279 at 62, and $14,153 at 58. I was shocked how low these number are. I've been saving $24k+ for the last few years and intend to continue that, so I'm way ahead of where I need to be. I'm personally OK with that because I figure I'll dial back my investing as the kids get older and get more expensive and college kicks in. My ideal goal is to reach financial independence at 58.

[lordxizor]

Two year in cash is a lot cram. Most recommend 3-6 months. Any particular reason you feel the need to carry so much?

Honestly have been thinking about this.  I'm not quite sure what the "recommended" amount of cash is to have. 6 months does not seem like a lot of time to me. I often worry about one wrong thing happening, whether it is my house or my health or job, that I could really use that cash. I've only recently got to this point so am pretty much thinking any extra cash is going to the stock market, one way or the other. Also should have my car paid off in 2021, I was putting most of my extra cash to pay that off the last two years instead of investing.

Mathematically, you'd almost certainly be best off throwing all but 3-6 months into the stock market. But personal finance is personal and it's not all about math. If keeping it in cash helps you sleep soundly at night, there's nothing wrong with that as long as you're also investing and avoiding high interest debt. You need to determine what your goals are and have your money work towards that. I don't know you or you situation, but don't just keep that money under a mattress out of fear.

[H2]

I think I asked this somewhere else, but curious to get all you money-lovers' opinions here....

What income would be required to accomplish the following goals?
1) Living in TN
2) maxing out tax-advantaged retirement accounts
3) saving for x kids' full college path (including graduate degrees)

I would start with what you think you need to live on after paying for 2 and 3. If you think $50k is enough to have a modest home and live the lifestyle you want to live, then work from that. Number 3 is a big wildcard too. I have no idea how much money you'd have to put away monthly to accomplish that. Personally I wouldn't pay for my kid's grad school or 100% of their undergrad, but that's just me. Let's use $250 a month for illustrative purposes.

$50k living expenses
$19.5k 401k max-out
$6k IRA max out
$3k college savings (assuming one kid)

That's $78.5k after taxes, assuming you're doing a Roth 401k and Roth IRA. So roughly $100k before taxes.

That's going to be tough to save that much money and maybe to make that much depending on what you do and how experienced you are. And honestly instead of blindly maxing out both your 401k and IRA, you should determine at what age to you want retire, how much retirement income you think you'll need, and determine what you need to save to get there. Especially if you're young, it may be far less than you'd think.

For example, I recently starting working with a financial advisor and he gives you "your number" as part of the initial onboarding. I'm 39 with $270k already invested for retirement. To reach my goal of $70k of income in retirement I'd only have to save $2,066 annually to retire at 65, $6,279 at 62, and $14,153 at 58. I was shocked how low these number are. I've been saving $24k+ for the last few years and intend to continue that, so I'm way ahead of where I need to be. I'm personally OK with that because I figure I'll dial back my investing as the kids get older and get more expensive and college kicks in. My ideal goal is to reach financial independence at 58.

For sure. I've heard 15% gross should go to investing from Dave Ramsey, although his stuff is simplified for personal finance newbies. I suppose truth is that I have no idea how much I want to live off of when I'm older and retired. I'd want to die in my house with a nurse taking care of me, that's for sure. I'd also love a yacht and a big-ass house. And honestly, at my young age I don't see myself interested in ever fully retiring.

[lordxizor]

For sure. I've heard 15% gross should go to investing from Dave Ramsey, although his stuff is simplified for personal finance newbies. I suppose truth is that I have no idea how much I want to live off of when I'm older and retired. I'd want to die in my house with a nurse taking care of me, that's for sure. I'd also love a yacht and a big-ass house. And honestly, at my young age I don't see myself interested in ever fully retiring.

Dave Ramsey is a decent one size fits all solution and he's obviously very successful at getting people's finances on track, but I think there are better, more personalized ways of doing it than following his baby steps. My financial coach training was actually through Dave Ramsey, but I'm not fully on board with everything they teach.

It's really hard to figure those types of things out, especially when you're young. Just don't fall into the trap of not investing because you can't ever see yourself fully retiring. A large percentage of people don't choose to retire, but are forced into it based on health or their company letting them go sooner than they're ready. This is why I say I'm saving for financial independence rather than for retirement. If I reach FI at 58 (my current goal), but choose to work until 70, that's great. Reaching FI gives you the ability to do what you want to do with your time without having to worry about the paycheck that comes with it. That sounds incredibly freeing to me personally.

[jingle.boy]

For sure. I've heard 15% gross should go to investing from Dave Ramsey, although his stuff is simplified for personal finance newbies. I suppose truth is that I have no idea how much I want to live off of when I'm older and retired. I'd want to die in my house with a nurse taking care of me, that's for sure. I'd also love a yacht and a big-ass house. And honestly, at my young age I don't see myself interested in ever fully retiring.

Dave Ramsey is a decent one size fits all solution and he's obviously very successful at getting people's finances on track, but I think there are better, more personalized ways of doing it than following his baby steps. My financial coach training was actually through Dave Ramsey, but I'm not fully on board with everything they teach.

It's really hard to figure those types of things out, especially when you're young. Just don't fall into the trap of not investing because you can't ever see yourself fully retiring. A large percentage of people don't choose to retire, but are forced into it based on health or their company letting them go sooner than they're ready. This is why I say I'm saving for financial independence rather than for retirement. If I reach FI at 58 (my current goal), but choose to work until 70, that's great. Reaching FI gives you the ability to do what you want to do with your time without having to worry about the paycheck that comes with it. That sounds incredibly freeing to me personally.

Great statement. I’d never really thought about it in these explicit terms, but this is my exact mindset (and ironically, goal/timeframe). 

[MinistroRaven]

For sure. I've heard 15% gross should go to investing from Dave Ramsey, although his stuff is simplified for personal finance newbies. I suppose truth is that I have no idea how much I want to live off of when I'm older and retired. I'd want to die in my house with a nurse taking care of me, that's for sure. I'd also love a yacht and a big-ass house. And honestly, at my young age I don't see myself interested in ever fully retiring.

Dave Ramsey is a decent one size fits all solution and he's obviously very successful at getting people's finances on track, but I think there are better, more personalized ways of doing it than following his baby steps. My financial coach training was actually through Dave Ramsey, but I'm not fully on board with everything they teach.

It's really hard to figure those types of things out, especially when you're young. Just don't fall into the trap of not investing because you can't ever see yourself fully retiring. A large percentage of people don't choose to retire, but are forced into it based on health or their company letting them go sooner than they're ready. This is why I say I'm saving for financial independence rather than for retirement. If I reach FI at 58 (my current goal), but choose to work until 70, that's great. Reaching FI gives you the ability to do what you want to do with your time without having to worry about the paycheck that comes with it. That sounds incredibly freeing to me personally.

Great statement. I’d never really thought about it in these explicit terms, but this is my exact mindset (and ironically, goal/timeframe). 

Guys, teach me! Please I would love to do something like this (maybe at at lower level) but still.

[goo-goo]

Does anybody recommend a stock alert service or use one? Any thoughts on the Motley Fool one?

[cramx3]

I saw my sister's husband for the first time this year when I went to FL to see my family and he really helped me with my investment strategy.  Fixed my 401k for more aggressive and cheaper investments while still being diverse.  Also, set up a high yield savings for my cash I have just sitting around.  Sounds basic, but I totally didn't realize there were free websites with 0.5 and no minimums.  Also, finally got my federal tax return today and paid off my car which leaves my mortgage as the only debt. Then I took the rest of the tax return and invested into VT (vanguard total world stock ETF).  That was actually something I had started doing with some extra cash every month already.  Feeling good about going into 2021 financially. 

Now I'm wondering if I should put more into bitcoin... I think it's just a matter of when really.  My small "gift" investment from my brother has tripled in one year.

[lordxizor]

I'm very surprised high yield online savings accounts aren't more widely known. I've had one for over 15 years. As recently as 2019 I was making 2.5%. Rates have dropped a ton obviously and are around 0.5% now, but that's still way better than 0.01% that many brick and mortar banks give.

[Phoenix87x]

How many people are messing with bit coin and is it legit?

I know I'm way late to the party, but its got my attention now with everything going on. How do you even start? Just go online and buy it?

[ReaperKK]

I have bitcoin and a few other crypto's on coinbase.com, there are other outlets where you can buy from like robin hood. Buying it is simple, create an account at coinbase, verify your identity and buy some bitcoin (or other cryptos)

It's a legit currency that can be used a few locations but a lot of people use it as an ultra-high risk investment vehicle. My buddy who works as a data scientist at coinbase told me a lot of younger people are flocking to it as olders folks like to flock to gold.

[lordxizor]

I view bitcoin similarly to how some view gold. It's a hedge against complete economic collapse or hyperinflation, but really shouldn't be viewed as a normal investment since it's so volatile. I personally don't own any, but have thought about it.

[cramx3]

How many people are messing with bit coin and is it legit?

I know I'm way late to the party, but its got my attention now with everything going on. How do you even start? Just go online and buy it?

Reap said what to do, but I'd recommend Robinhood over coinbase because robinhood is free.  Coinbase is good if you are interested in other cryptocurrencies, but if you just want bitcoin, stick wtih robinhood IMO.

My brother gave me $100 in bitcoin last christmas as a gift, said hold it and it'll be the most expensive gift you've ever gotten  Well, I put in anohter $100 that same time to get the $10 start up bonus.  So $210 in bitcoin last Christmas and it's sitting around 1150 now so almost made $1k from that gift.

Also, I wouldn't spend bitcoin.  If you want to get in, hold it.  The value is going to go way up IMO over time and spending it would be like overpaying significantly for whatever you are purchasing.

[Phoenix87x]

Good points guys. Thanks

[Cool Chris]

I just looked at bitcoin. It's not something I've ever followed. I knew it was going crazy lately but I didn't realize it was going that crazy!

[ReaperKK]

Yea it's pretty nuts. There was a fantastic story I read yesterday about a guy who had a little over 7000 bitcoin and he can't access it because he forgot his password.

https://www.nytimes.com/2021/01/12/technology/bitcoin-passwords-wallets-fortunes.html

[cramx3]

I just looked at bitcoin. It's not something I've ever followed. I knew it was going crazy lately but I didn't realize it was going that crazy!

It's really wild, and I really don't totally understand it, or more importantly, why people are valuing it so much, but so far it seems to have some staying power.  I'm thinking on the next dip to throw another couple hundred in just to see, but I'm not risky enough to throw any serious amount of money into it for the fact that I don't understand it all.

[Chino]

When Bitcoin was $135 a coin, I was given the opportunity to go halves on a $10k purchase of them. Not doing it is one of my biggest regrets in life. I instead put a lot of that money into cannabis stocks *barfs*.

[cramx3]

When Bitcoin was $135 a coin, I was given the opportunity to go halves on a $10k purchase of them. Not doing it is one of my biggest regrets in life. I instead put a lot of that money into cannabis stocks *barfs*.

damn, but those types of regrets are normal if you play the investing game.  So many "what ifs".  My CGC burned me bad, but I held it and it's been doing really well lately.

[Cool Chris]

I'm thinking on the next dip to throw another couple hundred in just to see,...

Next dip? Looking at its history, dips have been few and far between.

[lordxizor]

I'm thinking on the next dip to throw another couple hundred in just to see,...

Next dip? Looking at its history, dips have been few and far between.

Really? Over the last couple years maybe, but it's been volatile as hell over the last decade or so.

[cramx3]

I'm thinking on the next dip to throw another couple hundred in just to see,...

Next dip? Looking at its history, dips have been few and far between.

It had a 25% drop just last week and today regained itself. It's pretty wild.  I'm not against putting some money into it because of the potential, but could never throw a lot into it.  Also, I think there's definitely criminal activity associated with it, as in dark web currency.

[Cool Chris]

Next dip? Looking at its history, dips have been few and far between.

Really? Over the last couple years maybe, but it's been volatile as hell over the last decade or so.

Ha, you are right, I had the chart set at 1Yr without noticing. That peak in Dec 17 is pretty unique, as it took about 3 years to come out of it.

I evaluate my portfolio this time of year, and I will definitely be keeping my eyes on this.

[ReaperKK]

When Bitcoin was $135 a coin, I was given the opportunity to go halves on a $10k purchase of them. Not doing it is one of my biggest regrets in life. I instead put a lot of that money into cannabis stocks *barfs*.

I have so many of those regrets , I had multiple chances to buy bitcoin when it was pennies for a coin and I thought "Why would I throw a few hundred away?"

My other big regret is I held a lot of puts on SPY right at the start of the pandemic when spy was at 330ish, the position went against me and I was very quickly in the red $1000 so I chickened out and closed all those positions, had I kept them to expiry it would've been close to $100k in profits.

I'm thinking on the next dip to throw another couple hundred in just to see,...

Next dip? Looking at its history, dips have been few and far between.

It had a 25% drop just last week and today regained itself. It's pretty wild.  I'm not against putting some money into it because of the potential, but could never throw a lot into it.  Also, I think there's definitely criminal activity associated with it, as in dark web currency.

This was a big reason I wasn't that interested in Bitcoin because it was used for a lot of dark web transactions and I kept wondering how would it gain a foothold as a transactional daily currency.

[lordxizor]

Do you guys have a goal in mind for Roth vs traditional assets? I was always gunning to get to a 50/50 mix after using only traditional 401k for the first 13 years of my career. Well... I'm getting close to 50/50 at this point and I'm not sure if I should shift my contributions to maintain a 50/50 mix or if I should keep plugging away at Roth.

[goo-goo]

Do you guys have a goal in mind for Roth vs traditional assets? I was always gunning to get to a 50/50 mix after using only traditional 401k for the first 13 years of my career. Well... I'm getting close to 50/50 at this point and I'm not sure if I should shift my contributions to maintain a 50/50 mix or if I should keep plugging away at Roth.

Rule of thumb is:
-401k up to the max employer contribution
-Roth or IRA (6k per year)
-Health Savings Account (if you are eligible; $3600 for individuals; $7200 for family)
-Max 401k ($19.5k per year). Just be careful if employer matches per paycheck. If you max it out early, you won't get the employer contribution.

After that, go for taxable brokerage account. Now you can do 50/50 with 401k and Taxable brokerage. With the taxable account, you can withdraw your money at any time. I'm currently doing 50/50 with employer 401k and taxable since I already maxed out my Roth contribution for the year.

[lordxizor]

Yeah, I have my own similar priorities, but that doesn't answer my question. Do I stick with Roth or traditional for the 401k and IRA? I'm inclined to just stick with Roth for both given my current tax bracket and the fact that taxes have to go up someday to pay all the insane debt our government is taking on. But I like having around a 50/50 mix overall with all my investments combined. But that's not really based on anything mathematical, just a nice feeling.

I should clarify that it's 50/50 Roth versus traditional in all.of my investments, not in my current contributions.

[goo-goo]

Yeah, I have my own similar priorities, but that doesn't answer my question. Do I stick with Roth or traditional for the 401k and IRA? I'm inclined to just stick with Roth for both given my current tax bracket and the fact that taxes have to go up someday to pay all the insane debt our government is taking on. But I like having around a 50/50 mix overall with all my investments combined. But that's not really based on anything mathematical, just a nice feeling.

I should clarify that it's 50/50 Roth versus traditional in all.of my investments, not in my current contributions.

Ok, my bad. So your 401k has both Roth and traditional. Well, I would go 50/50. With the traditional, you lower your taxable income. With Roth, you don't get that benefit but you don't get taxed during withdrawal. With your IRA, you can go Roth all the way. The beauty of the Roth IRA (the one outside your employer) is that you can use it as an emergency fund. You can withdraw your contributions (not earnings!) without being taxed.  That's why outside your 401k, I would go Roth. I'm on the same boat as you: taxes have to eventually go up (matter of when, not if they go up).

[Cool Chris]

But I like having around a 50/50 mix overall with all my investments combined. But that's not really based on anything mathematical, just a nice feeling.

I've checked out some online calculators that are supposed to tell you which is best suited for your circumstances, but it is difficult to make the necessary assumptions about where you'll be financially in 20-30+ years. My split is about 60/40, the 40% being traditional that was rolled over from my longest employment, and the 60% being everything I've set aside since. I was going to convert the traditional but the calculations I ran showed I could actually lose money in the long haul.

[lordxizor]

But I like having around a 50/50 mix overall with all my investments combined. But that's not really based on anything mathematical, just a nice feeling.

I've checked out some online calculators that are supposed to tell you which is best suited for your circumstances, but it is difficult to make the necessary assumptions about where you'll be financially in 20-30+ years. My split is about 60/40, the 40% being traditional that was rolled over from my longest employment, and the 60% being everything I've set aside since. I was going to convert the traditional but the calculations I ran showed I could actually lose money in the long haul.

My financial advisor gives us access to software that can do all these types of simulations to figure out the best path, but it's complicated as hell to figure out how to use. I should just ask him to do it for me. It just uses current tax rates and already scheduled changes like the rollback of the Trump tax cuts though. I mean, taxes have to go up some day, right? Neither party seems interested in stopping the spending.

[cramx3]

WTF is going on with Gamestop 

Now AMC?

Is reddit manipulating the market?  I'm so clueless as to what's going on.

[lordxizor]

WTF is going on with Gamestop 

Now AMC?

Is reddit manipulating the market?  I'm so clueless as to what's going on.

Yes, that reddit crowd is basically manipulating the market. Kind of bizarre what's going on.

[Ben_Jamin]

WTF is going on with Gamestop 

Now AMC?

Is reddit manipulating the market?  I'm so clueless as to what's going on.

Yup, they all said "Fuck You Hedgefund Billionares" and began to buy.

[MinistroRaven]

WTF is going on with Gamestop 

Now AMC?

Is reddit manipulating the market?  I'm so clueless as to what's going on.

Yes, that reddit crowd is basically manipulating the market. Kind of bizarre what's going on.

Is that manipulating? How about the CNBC who told Melvin sold his position, but obviously not true, isn't that manipulating the market too?

Elon Musk and some other big fishes also tweeted about GME, are they also manipulating the market, I seriously don't understand.

[cramx3]

Manipulating might not be the right word, but it doesn't seem the intention is normal here.  I really don't know.  I watched a youtube video this morning and it seems more aligned with:

they all said "Fuck You Hedgefund Billionares" and began to buy.

than a legit investment strategy.  But like I said, I don't understand this and it certainly seems like some people are significantly profit (reddit people) while others significantly lose (hedge fund billionaires)