I need some advice for just starting out with my investments. I recently got my financial buffer to where it needs to be (6 months of living expenses + money for playing poker part time)

Right now, I'm making about 4x what my monthly expenditures are and I need some advice as to how I should build a few different plans(1-5 year plan, 5+ year plan, 10+ year plan)

The 1-5 year plan is for building faster capital to reinvest (high risk)
The 5+ year plan is money being put away for a house for myself/other real estate investments (med risk)
The 10+ year plan is for retirement (low risk)

I generally have about 2-4k of extra money to invest each month. What I need help with is deciding where to put the money. Should I just evenly distribute the money across these general plans, or put it all into the higher risk 1-5 year plan to reinvest, or ????

The good thing is you seem like you're stable and on your way to "doing the right things". The bad thing is you have your investment ideas completely wrong. That's ok, you can fix it.


"The 1-5 year plan is for building faster capital to reinvest (high risk)
The 5+ year plan is money being put away for a house for myself/other real estate investments (med risk)
The 10+ year plan is for retirement (low risk)"

This is completely reverse of what it should be. The longer time horizon you have for an investment, the MORE risk you should be taking. The time will negate the risk. In the short term, you want to have very little risk.

Let's make an example. Say you need 20,000 for a down payment on a house. You have 15k. You need another 5. It'll take you about a year to save that. So, where do you park your 15k?

Would you put it into something like a stock, where you can get easily see a 20% swing (or more) in 1 year? Or would you put it in a 1 year CD, that guarantees X amount of return in exactly 12 months? The answer is obvious. You need that money. If you need 12 months to save 5k to reach your goal, and at the end of that 12 months the 15k you put into a stock fell 20%, you've literally just lost half a year of saving.

In the long term, however, you want more risk and more volatility. We know the market has a tendency to move up over time. We also know that the long term returns in the 3 asset classes (stocks, bonds, cash) are dramatically different. You want to be in stocks long term.

Hope this helps. I'll expand on it more if you wish.

I'm also Australian. I suspect that a large chunk of the people who advised you are older than you and I (i'm 32)

Australian property is unusually expensive by world standards, largely because the state governments artificially reduce the land available for development. Our parents have benefited from this as land has increased in value as a result of this policy decision. That's not an intrinsic increase in the value of the property, just a consequence of government policy that is unlikely to be duplicated in the same fashion in the future because population growth will slow. If Australian population growth slows, then there will not be the same increase in demand for property as there has been over our parent's lives.

*I've made a few shortcuts in explaining my thoughts here, but I think the underlying concept is sound.

Thanks for the advice. What you said makes complete sense. I guess my post shows how new I am to the investing game.

So hypothetically, let's say there's a 24 yo guy, who's single, has no kids, and has no assets. If he had an extra $2k each month to invest, where should he be putting it in the beginning (for the first year)?

Build an emergency fund that you're comfortable with (6 months of living expenses is the standard advice but adjust to your circumstances). After that, 99% of people would be best off by putting the money in a Vanguard Target Date Fund.

Location: United Kingdom
Income: £60k salary with approx. £1.2k disposable per month to invest; starting pot of ca. £10k
Risk Tolerance: Happy to take on high risk/high return as long as it is diverse (don't want to put it all on black) - happy to risk losing 50% of value with 5% probability over 3 year time horizon
Timeframe for investment: 3-5 years, possibly longer term. Return is the primary goal. Secondary goal is to learn the skills that will help me manage investment a larger sum in future (possibly upwards of £250k).
Debt: Own a property worth ca. £320k with £150k mortgaged

Was considering investing in equity but seems that transaction costs might be too high to be too active in managing such smaller sums and I'm not sure I'm comfortable investing larger chunks (£5k+) without prior experience.

This is where every opinion will differ. This can be viewed as a philosophical question, or a question of what your situation is and what you want. There are so many variables that there is no "correct" answer.

For example, are you a person who has goals of having a large family and a wife? Are you a person who doesn't value family and children and value financial success over all other things? This is a very hard thing to understand because people come from different perspectives and goals, and both of them can change over the course of time.

I'll give you the logical answer. As in poker, you should always have an "out". in my 20s, I was a person who never wanted to have kids, never wanted to marry. I broke up with my girlfriend of 6 years at one point because I wouldn't even discuss the topic of marriage. But I always had an out. I always put my money in a way that gave me the most flexibility "just in case" things didn't turn out the way I expected.... and they didn't.

The answer to your question is "it depends". What situation are you in right now? What do you want in life? If you want to be rich and screw as many girls as you can, it's dramatically different than say being devoutly religious and having a large family. This is simple logic, as we see examples of both of these in society, as much so as countless other examples.

Invest for the maximum flexibility. Have short/mid/long term goals. Money isn't what you think it is. Money, in many aspects, is freedom. The more financially secure you are, the more you can pick and choose what you want because you can. Poor people have relatively limited choices. Rich people have almost unlimited choices.

I'm sorry for the philosophical perspective, but to answer your question : only you can determine what is best for you. It's different for each person. You ask what is best for a 24 year old guy who is single and can do what they want with 2k a month? There are so many factors involved that there is no right answer because there isn't enough information.

In the end, I would say you should have at least 2 goals, short/long term. You could say 3, short/mid/long, but mid is very hard to define, as short/long is pretty easy. Develop a plan for short/long term, and know that the situation is fluid and can change at any time. But at the very least, plan for the short term, because that is the only thing you can really see. The rest you have to figure out on your own, dependent on your situation. (short term safety, long term risky).

Completely agree. Determine what is right for you. Some people spend more than others. and some people can cut back more when needed than others. Only you can determine that.

Hello Newbie here!

Been reading the thread and I appreciate anyone pitching in on my situation.

I will be 30 this year and I would like to start investing for retirement as well as being able to park some $ to where i can see a nice return on it...Chase savings acct sucks.

I already paid off credit cards and have 6 month emergency fund in place. For this year my goal is to open and max out my wifes and I roth IRA.

However I have about 5-10k that I would like to start investing rather than it being parked in a savings acct.

Aside from that, what would you recommend doing with $5-10k if I would like a decent return in 1-5 years?

Fwiw, yearly income from poker is 80k (safe number, it has been 100kish last few years and half way there ytd). Living expenses, including mortgage,etc is aroud 45k, lets round it up to 50 in case wife decides to stay at home.

Eventually I would like to start adding any extra monthly income to actively buy index mutual funds? (Been reading up on Buffets advice quite a bit, since i am completely new to investing).


I live in Texas.

Thanks!

what are you doing in 1-5 years and how much money do you need to have available when that event occurs?

mexico (u.s citizenship)
none
allin
next 20-30 years (retired an need income)
none

have a pension of about $2200 a month, not sure if i can roll that into a fund have about 800k usd tied up in stock a of a family company i can sell off and get almost immediately.

tried looking on vanguards website but am completely lost, i am retired @ 62 and want to boost my monthly income rather then just collect my 800k and slowly use that up over the next 20-30 years

Follow this thread a lot but havent posted yet. Going to start with a slightly simpler question than where should i put all my money...

23 y.o. professional poker player in the US, very recently maxed out my traditional IRA for 2013 and 2014. This is my first retirement account. I make too much for a roth IRA. Currently this money is just sitting in my fidelity account, not invested. How should i invest this money in my IRA? Curious on the reasoning behind it, and any reading materials you could point me towards. I want to learn a lot more about investing going forward. I've really been trying to read through but its all so daunting as a complete fish...

thanks in advance for the help.

To be honest, nothing in particular, just wanted to be able to "park" some cash and get a decent interest rate on it, maybe CDs could be the answer.

Just figured if I take care of maxing out IRAs, i would like to start having a my money start generating some passive income.

What would you suggest? I could be completely off with my plan, but maybe creating an investment portfolio is a good alternative, but would like to do it all via Etrade if possible.

Saying you want a decent return in 1 to 5 years is similar to saying I want to make 10 bb/ hr in my next 10k hands. Even if you are extremely prudent, 5 years is very short and variance filled. I would suggest if you don't need it in the next 5 to 10 years ( housing down payment, kids college, retirement), then you should just put it in a Roth IRA with a low fee target fund and not look at it until you retire. If you already have it maxed for you and wife, then consider a taxable account or a 529 if you plan on having kids soon.

This is retirement money. This portfolio should be expected to have a life of ~70 years(your ~life expectancy). The most important thing over that long of a time frame is asset allocation and expenses. You could use one of Fidelity's Freedom fund with a target date close to your expected retirement age, or if you wanted something a little more complex:
http://www.bogleheads.org/wiki/Three-fund_portfolio

As far as reading, I would start here:
http://www.bogleheads.org/wiki/Bogle...ent_philosophy

Books I like:

The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On with Your Life Paperback
by Bill Schultheis


The Four Pillars of Investing: Lessons for Building a Winning Portfolio
by William Bernstein

Your post is quite confusing. What is your goal, maximum income for the rest of your life or trying to leave money behind? If you want current income,
www.immediateannuity.com says you could take your 800,000 and get ~4400 a month for the rest of your life.

thanks for the response. ill definitly check out those books.

In your and whoever elses opinion... is a vanguard 2060 target retirement fund the best and simplest play for me then? it has a $75 load fee i saw which is annoying. my account is with fidelity so i was trying to figure out if i could do this cheaper using fidelity funds but to build my own three fund portfolio with fidelity funds wouldn't let me meet the minimum buys for the nonUS stock fund or for bonds.

These are the funds you need for the three fund portfolio at Fidelity.
Fidelity Spartan Total Market Index Fund (FSTMX)
Fidelity Spartan Global ex U.S. Index Fund (FSGDX)
Fidelity Spartan U. S. Bond Index Fund (FBIDX)

There is an investor class ($2500 min) and an advantage class ($10,000 min). You should have enough for the investor class, no?

The $75 fee is a fidelity fee to invest outside of Fidelity? I suppose if I wanted to do Vanguard funds then I would transfer my account to Vanguard.

so, at age 27 I basically have never allotted an emergency fund, I basically have my emergency fund as what is in my checking, that I use to spend; which, im ******ed because it does just that, gets spent. I need to start building an emergency fund, where should I park this? any information would be helpful, i will look into it as well, thanks

Emergency funds should be parked in safety. So, cash.

Having it in your checking account is fine. If your question is more like "how do I move my money so I don't spend it", that's a spending issue. Only you can figure that out. If it changes the way you think about it by moving it from checking into savings, then by all means do it if it'll help you psychologically to curb your spending.

House is taking care of, but we do plan on having kids soon, so I will def look into what you suggested.

I guess another option is also to open a SEP IRA, but I would like to have some kind of investments other than for my retirement.

Appreciate all of your input and taking the time to give advice.

Nothing wrong with opening up a mutual fund account and funding it with after tax money. I think in your original question you mentioned CDs or something else very conservative, but yields are low right now and not very exciting.
What I would do in your place is put some money away in a balanced mutual fund and not look at it for 5 years. It is not as conservative as a CD but your potential for gains that exceed inflation exist.

As in Vanguard SP500 (VFINX) ? Or any other you guys may suggest?

Vanguard LifeStrategy Moderate Growth Fund (VSMGX)

It is a mixture of stocks and bond, both international and domestic. It is more diversified than the 500 largest stocks in America, which is what the S&P 500 consists of.

Thank you, wanted to follow up to see if the changes I made make sense. I read the bogleheads Wiki on the 3 fund portfolio and, and with some additional research, identified a goal of 60% domestic equity, 35% international equity, and 5% bond. I have a very high risk tolerance but still wanted to dip into some bonds in order to set the stage for future portfolio re-allocations. For reference, this is what I had:

New portfolio, which represents the best way I could identify that minimizes expense ratios while getting close to the 3 fund allocation goal, given the constraints of the 401k fund offerings and the minimum 10k balance to get into Admiral shares at Vanguard.

57% Domestic, 42% International, 1% Bonds
* 40% Total International Stock Index Fund Admiral Shares (VTIAX)
* 18% Total Stock Market Index Admiral Shares (VTSAX)
* 35% Dryden S&P 500 Index Fund
* 6% BTC LIFEPATH 2050 L (which is comprised of 54% US equity, 32% Int'l equity, and 14% Bonds)

The Dryden S&P 500 Index is the only fund offered in my wife's 401k that has an expense ratio significantly less than 1%, which is why it makes such a big chunk of the total portfolio. My 401k does not offer blend funds, other than VIIIX which tracks the S&P 500, so I decided to go with the 2050 target fund there because of its 0.1% expense ratio and exposure to bonds. We plan to most aggressively fund my 401k going forward, so I expect we'll get closer to our 3 fund portfolio goal by the end of the year.

Good to go or should I consider making additional changes?