The "I have XX money to invest, where should I put it?" Thread

[50khands@400-600]

Any Canadians have advice for the best place for a mid 5 figures amount - have the max contributable for tfsa so first xk would go in there but have been overseas and have just some what ignored it (some in stock market, some earning 3.5% (liquid), too much earning very little in bank). Any investment firms to recommend? What fees are reasonable? Long term is fine.

[diskoteque]

Bigtime financial noob here looking to get started with investing.

-27 years old
-My 401k is maxxed out (only one year in though) asset mix is like 60% stock, 25% bond, 15% short term reserve.


Now I just started putting more money into mutual funds. i have $5000 in VASIX (80% bond, 20% stock) and another $5000 in VNYTX (long term muni bond/new york).

i thought VNYTX would be a good buy because it's tax exempt and my salary is 160,000 so i get destroyed on taxes being in the bracket that i'm in.

so all in all my current asset mix is like 65% bond, 30% stock, 5% short term reserve

anyway, i know that my current strategy is too risk averse and i should have some more exposure to stock. i dont know much about the stock market but it seems to me like a pullback is coming soon and it just doesnt seem like a good time to buy but what do i know?

i'm probably going to leave the $10,000 in the two funds above, but start dumping most of my paychecks into another fund that you guys suggest.

my risk tolerance is moderate. basically, i hate my job and the 160k salary is barely keeping me from quitting although ill probably be out in a couple of years. im also looking to buy a house sometime within the next few years and dont want to take a beating in the market between now and then.

[LT22]

need more info...you shouldn't really be in the market if you're planning on using the money to buy a house in a few years

Any debt? Rates? Etc

Amount of your 401k? Amount in your taxable accounts? Bonds funds (except munis) are not good for taxable accounts, you should be allocating bonds to your 401k where they're sheltered. Stock index much better in your taxable account. However, it doesn't really sound like you want to lose any of your taxable account, in which case I suggest you look at other options. Need to know more about your situation/tolerance.

[diskoteque]

Originally Posted by LT22

need more info...you shouldn't really be in the market if you're planning on using the money to buy a house in a few years

Any debt? Rates? Etc

Amount of your 401k? Amount in your taxable accounts? Bonds funds (except munis) are not good for taxable accounts, you should be allocating bonds to your 401k where they're sheltered. Stock index much better in your taxable account. However, it doesn't really sound like you want to lose any of your taxable account, in which case I suggest you look at other options. Need to know more about your situation/tolerance.

my 401k only has 17k in it. i just started contributing this year (my first year working a real full time job).

i have 130k student debt @ ~6.5% but i already decided that i'm not paying it back. i pay the minimum every (basically 1k in interest+ very small principal) month so i don't default but that's it. to an outsider, it would seem that paying down these loans aggressively (and getting a guaranteed return of 6.5%) would be a no-brainer but there's other factors at play here which have convinced me that it's not a good idea to pay these back:

#1- i think there will be some kind of govt bailout for student debt in the next few yrs.

#2- i am eligible for income-based repayment (and when you pay this amount for 20 years your debt is forgiven). when i leave my 160k/yr job i'll probably just play poker and my monthly payment will be like $100. so im better off just saving tons of money now than putting it toward debt.


basically im just looking for a place to put $$$ other than a savings account. even if im only making 3% thats fine, so thats why i figured muni bonds would be a good idea. as stated above, i went with VNYTX and VASIX but really have no idea what im doing.

[LT22]

#1 possibly...IMO, the bailout already occurred though with the 20yr income based repayment forgiveness

2) $100/month? If you're single that means your adjusted gross income is $25,000/yr. You're going to give up $160k/yr law for $25k as a poker player? Live? Online? If you inspire to buy a house, I recommend you do it while you're making bank at a job. Prob gonna be tough to get a house loan with $130+K in school debt as a profession poker player making $25k/yr.

re: risk tolerance, bonds can still lose a significant amount of money. If I told you the market was going down, what % would you be comfortable losing?

BTW #1/2 remind me how much our country is ****ed

[dalerobk]

If you're looking to stash money away short term, then VNYTX is not a good idea. It has a duration of 6-7 years.

[diskoteque]

Originally Posted by LT22

#1 possibly...IMO, the bailout already occurred though with the 20yr income based repayment forgiveness

2) $100/month? If you're single that means your adjusted gross income is $25,000/yr. You're going to give up $160k/yr law for $25k as a poker player? Live? Online? If you inspire to buy a house, I recommend you do it while you're making bank at a job. Prob gonna be tough to get a house loan with $130+K in school debt as a profession poker player making $25k/yr.

re: risk tolerance, bonds can still lose a significant amount of money. If I told you the market was going down, what % would you be comfortable losing?

BTW #1/2 remind me how much our country is ****ed

im single so i'm not really looking to buy a crazy insane house. if i do end up going the poker route i'm just gonna buy a 50k-100k condo in vegas in cash (unless mortgage rates get crazy low).

all in all, i have like 50k in the bank, 17k in my 401(k) and 10k in the aforementioned mutual funds.

anyway, dont want to get too off topic.

my risk tolerance is moderate to low. i wouldn't be comfortable losing more than 25% of my investments. i know that bonds arent a slam-dunk but they are certainly safer than stocks, no?


and i agree that this country is ****ed. it's crazy how i'm supposed to be "one of the lucky ones" who "made it" and i consider myself to be in a somewhat ****ty financial situation despite making more than 98% of the population. it's crazy how i envy my high school dropout friends who got city jobs, are halfway to retirement, and have sweet pensions.

[diskoteque]

Originally Posted by dalerobk

If you're looking to stash money away short term, then VNYTX is not a good idea. It has a duration of 6-7 years.

great, thanks for this info. is VASIX ok though? ant suggestion on what i should do with the 5k i currently have in VNYTX?

and does your point re VNYTX still stand considering im in the highest tax bracket?

[LT22]

Originally Posted by diskoteque

i know that bonds arent a slam-dunk but they are certainly safer than stocks, no?


...i consider myself to be in a somewhat ****ty financial situation despite making more than 98% of the population.

-as mentioned, time frame is really important for bonds

-You're not in a somewhat ****ty financial situation. I'll leave it at that b/c I don't want to derail the thread.

[darkhawk-2000]

was curious if people have thoughts about fidelity life cycle funds. Looking specifically at the 2025 ones for the parents. No transaction cost since it's a fidelity account.

[LT22]

I think they're great, so long as they meet the desired asset allocation for your parents. Focus on the asset allocation and not the year of their retirement.

I prefer Vanguard for those type of funds since the expense ratio is lower at Vanguard (0.18%) vs (0.73%)

[dalerobk]

I think Fidelity's Freedom Funds suck. They're better than your parents simply picking random mutual funds to invest in, but they invest in two dozen different Fid funds. I think that's way overkill. More importantly, they charge .55% more per year than Vanguard. That makes a huge difference over the years. If your parents invest $100k now and the pre-expense return was 8% a year, then at Fid they would have an average annual return of 7.27% while at Vanguard it would be 7.82%. At Fidelity they would have $249k in 2025, while at Vanguard they would have $266k. That's not counting any new money they might put in or anything.

Would your parents be comfortable moving their money? I think your parents would be better off transfering to Vanguard and using their 2025 Fund. I actually have my money at Fidelity. I'm not a Fidelity hater or anything, but I use their index funds and iShares ETFs. I wouldn't recommend their actively managed funds. They're just too expensive.

[darkhawk-2000]

i've been reading about how instead of buying a lifecycle fund, you do a do-it-yourself three-fund portfolio using lower-cost Fidelity funds. You can duplicate a lifecycle fund portfolio by for example

60% Fidelity Spartan Total Market Index Fund (FSTMX) 0.10% ER
25% Fidelity Spartan International Index Fund (FSIIX), 0.10% ER
15% Fidelity U.S. Bond Index Fund (FBIDX), 0.22% ER

this lower ER would be much lower than a .75% ER in a fidelity lifecycle fund

[LT22]

For your parents, it's just going to be easier if you get one target fund. The target funds require no rebalancing, whereas with the three fund you will have to rebalance it for them from time to time.

My preference would be Vanguard Target > Fidelity three funds+lower expense >>>>>>> Lifecycle

Is this all an IRA? Taxable account? How much are they looking to invest? Do they have other accounts (e.g. 401k w/ employers)?

[dalerobk]

Originally Posted by darkhawk-2000

i've been reading about how instead of buying a lifecycle fund, you do a do-it-yourself three-fund portfolio using lower-cost Fidelity funds. You can duplicate a lifecycle fund portfolio by for example

60% Fidelity Spartan Total Market Index Fund (FSTMX) 0.10% ER
25% Fidelity Spartan International Index Fund (FSIIX), 0.10% ER
15% Fidelity U.S. Bond Index Fund (FBIDX), 0.22% ER

this lower ER would be much lower than a .75% ER in a fidelity lifecycle fund

This would be a good solution, if they are able and willing to rebalance regularly. But most people don't keep up with their finances enough and wouldn't do a regular rebalance. That would run the risk of their asset allocation getting majorly out of whack. If they are on top of things and willing to rebalance themselves and stick with it, then what you suggest would work well.

Also, note that 15% bonds is very low for people about 13 years from retirement. Fidelity 2025 actually uses 31-32% bonds, which is still quite aggressive.