Let's say you have a portfolio of $1 million dollars entirely invested in the S&P 500. You draw it down by 30k or 3% a year. Now 2008/march 2009 roles around. Your portfolio is down by 50% and suddenly you're drawing down by 6%. This has fairly big consequences because the losses you take by taking out cash will be permanent and wont recover in the resulting rally (if it ever happens).

It's a fairly good idea do have less risky investments the closer you get to retirement.

Country you live in: ON, Canada
Age: 24
Income: 3k/month
Amount Investing: 25k.
Risk Tolerance: Low
Time-frame for investment: 3-5 years
Debt: None

I currently have 6k invested in the TFSA, 9k in the RSP, and 40k invested in stocks through standard CDN and US margin accounts.

I have 25k cash allocated in various accounts at the moment: 6k for the TFSA (max contribution), 11k for the RSP (max contribution), and 8k for the margin accounts. I also just filed my tax return and expect 7k back later this year (I figure this would be good to go in my emergency fund).

My goal is to buy a place in 3-5 years, while contributing the maximum down payment I can afford at the time for a 300-350k house (I’m just setting this range as a goal, and it may or may not be realistic, e.g. will I be moving in with a gf/fiancé, or will I be single still, etc.), whilst having investments for retirement. The HBP for 25k is available for me when the time comes. Other then emergency fees, the only big purchase I see myself making in the next 3 years is a car (probably used) and vacations.

In a nutshell, I’m just not sure what to do with the following to best meet my goal, while maintaining investments for retirement:

1. The 25k of cash allocated in various accounts;
2. The anticipated 7k cash influx from the Ontario Tax Return;
3. My current 55k that I have invested;
4. And whether or not to use the HBP and withdraw the 25k as part of a down payment to a house;
5. How to know when and where to make adjustments to my investments during these 3-5 years.

Any advice would be appreciated. nuclear500, if you need me to be more specific with what I’m invested in so far, let me know and I can PM you.

Country: USA
Age: 19
Income: I'm a full time student with no "real" job. My poker income varies greatly, figure at least 1k-2k/month
Amount Available to Invest: Right now I have 8k in Fidelity Asset Manager 85% (FAMRX) I also have 6k in savings and 13k in online poker. I would say the total amount I want to invest is 10k (8k of which is in that Fidelity fund that I would be willing to move)
Risk Tolerance: High, I want to invest aggressively
Debt: Zero

the mix is decisive...

You'll have to forgive me or not knowing much about how Canadian regs work and how TFSA's and RSP's work exactly and how those can be used through the Home Buyer Plans so I'm going to speak my suggestions generically. I'm sure its similar to American IRA's and 401k's but I'd rather not make that assumption.

First, you anticipate the purchase of a C$300k within 5 years which should immediately say to you Capital Preservation - but with a little risk due to the "extended short term" timeframe with a low risk tolerance stated. Figure a respectable down payment on that is at least 10%. I would manuever funds such that $30k is ~60% straight CAD$ and ~40% short term bonds - something like Vanguard BSV (Primarly US Gov Short Term Treasury) and/or VCSH (Corporate Short Term). Being Canadian I'm not sure how you'd feel about denomating that in USD right now though since the CAD seems to be gaining ground and seems to want to overtake the USD soon. Though it may stay at near parity for awhile - shrug I'm sure you can find an equivalent for the bond funds on the TSX.

$3k/month expenses should be about $18k for an emergency fund, I like your plan for that $7k tax return to start building that up. Generally I suggest straight cash for anything that is truly an emergency for liquidity purposes - which lately I've begun to think could mean no more then ~3 months worth for straight cash, the rest could be short term bonds or CDs. If CDs are used I'd suggest a laddering setup so one comes up each month.

As for the $55k - we'd need to know if you really want to re-arrange that and then what it comprises its make up.

With your income being unstable (gambling) and low, you definitely need to establish an emergency fund that is for EXPENSES ONLY. Your 'roll needs to be considered completely separate.

So I'd keep that $6k in savings as your emergency fund.

Investing aggressively with high risk tolerance I would consider looking at something like
5% US Total Stock Market (Vanguard ETF:VTI)
10% Emerging Markets (Vanguard ETF: VWO)
15% US LargeCap Growth (Vanguard ETF: VUG)
20% US SmallCap Value (Vanguard ETF:VBR)
25% World Stock ex-US (Vanguard ETF: VEU)
25% US SmallCap Growth (Vanguard ETF:VBK)

This is a slight departure from something I would normally suggest to consider. Its growth tilted and roughly 67/33 US/World. I normally suggest more value tilt and less US - but I decided to take a turn from the usual for a change.

Country you live in: us
Age: 22
Income: 6k/month
Amount Investing: 10k
Risk Tolerance: Medium
Time-frame for investment: 8-10 years
Debt: 15k (student loans)


Ive been advised to strictly look at index funds as I have little-no motivation to do this type of research. As silly as this sounds, I pretty much want to just buy-it-forget-it, so I'm quite drawn to index funds that are automatically diversified.

I do NOT have any type of retirement fund at the moment because my job does not offer it yet. I will however, eventually enroll myself when it becomes available later this year. I am ALSO looking into buying a roth IRA account soon and maxing that for the foreseeable future (10-15 years (atleast), already setting money aside, 100% separate from the 10k i want to "invest" additionally. This is a good idea, right?)

My interest rate on my student loans are quite small, and I want to maximize my investing potential while I am still young. It seems more +EV to invest 8k now than to use it pay off my loans in full now. I think this makes sense in my brain, but I havent actually sat down and cranked out any numbers.

I also have a stable emergency fund/savings acct at 5k at ing that I wont touch for anything but emergencies, i deposit into it regularly.

So my question is/are: Pretty much given the information i gave (specifically i am not looking to do any real upkeep.) have I pretty much boxed myself into buying lifecycle funds/sp500? if not, please show me some index funds that make sense for what I want.

Thanks

aggo: I'd just look at opening a vanguard S&P tracker index, its the simplest and most straight forward with the lowest fees. Buy and forget.

Hey guys,

Awesome thread. Here's my situation:

I have $4,600 for this summer and senior year (I'm a junior in college). I currently have $4,500 in savings and will make 8k this summer after I pay taxes and for housing. So that's $12.5k I'll have to invest by the end of the summer.

Now, I'm 21 and won't touch this for a long time (30+ years). It seems like starting a Roth IRA would be a good call cuz I can withdraw tax-free. Any advice on this?

Also, I'm a bit lost about where to put the money. Seems like Vanguard's Target Retirement 2050 fits the bill...

Any advice would be awesome.

Thanks a lot,
Mariogs

Country you live in: US
Age: 20
Income: From Poker ~8k/mo
Amount Investing: probably start with 5-10k, will have much more after summer.
Risk Tolerance: Medium
Time-frame for investment: ??
Debt: 43k

I still have 3 more semesters of college that will cost about 40k over the next 2 years. I already have 43k in student loans from the first couple of years half of which I'm already paying 5% interest on. The question is, should i spend all my money on putting away this debt, or invest it to get a higher interest rate than im paying? If so, where should I put it?

thanks

I'd skip thinking about 'investing' and stash the money into a market account (like INGs) as an emergency fund. You can still collect interest, but the idea by having a back up account incase of something going wrong (losing income, needing a deposit for something, medical expenses) is a huge variance reducer. Once you have this fund you can start saving for long term investments.

Country you live in: USA (NY)
Age: 23
Income: $1k/month
Amount Investing: $10k-$15k
Risk Tolerance: Low-Medium
Time-frame for investment: 3-5 years
Debt- None

Background: Graduated college 2 years ago, was doing sales for the last 2 years but just quit and accepted a job in Manhattan as a commercial real estate agent. There is no base salary, I work on commission only and was told not to expect to close any business for at least 7-10 months.

I also own and operate an ATM business, and am currently making about $2000/month which I split with my partner. Thanks.

Thanks so much for your help. I would like to make an updated post to try to finalize my situation. I decided to choose Fidelity as my firm because of their reputation + their trade fees if I decide to do that. I invested $4k into their freedom 2050 fund (FFFHX) for my SEP-IRA (I know I said Roth-IRA, but I decided that I will like the temporary tax benefits from it).

Anyways, my main concern is which bond to invest $34k into and gradually increase my contribution for up to 4 years. My Fidelity representative whom I think is courteous & genuine, but has a little gamble in him suggested Massachusetts Municipal Income Fund (FDMMX) http://personal.fidelity.com/product...html?315902205, which he said has a risk index of 1.5 out of 10. I like this bond because the interest gained will be tax-free, federally and state-wise. Would this bond be a good idea to put 60-80% of my liquid fund into?

The reason why I am having doubts is because I stumbled upon a fatwallet thread (lol?) about munis, where half of them liked it and the other half didn't. I am also very confused with this poster's statement, "There is no way to efficiently sell munis after you buy them (only an 10 post sample tho). The bid-ask spreads are always going to be awful, because most of these issues trade very rarely." What does this exactly mean? How true will it apply to the bond my representative suggested?

Please guide me to investing success! Thanks =]

I'm not sure about your whole tax-free investment muni strat. This is in a retirement account, right? You pay taxes when you take it out. There are no tax implications until you withdraw, unless there is something special I'm missing here.

Personally, I'd say if you are investing in an IRA you want to go for growth. Everyone needs growth, unless you are retired, or close to it. If you look at the #s historically there is just no comparison between investing in the different asset classses (equities, bonds, cash). You want to be in equities for long-term growth.

And, Fidelity is fine for your needs.

-Wil

No, the $34k is money I want to put into a tax-free bond fund because I am in the 28% tax bracket. It is not for me to invest in an IRA account. Rather, this investment will be taken out in ~4-5 years for a purchase of a home with my family. I am looking for a bond fund that is low risk to maybe medium risk, where I am willing to lose at most 10% of my contribution, but hope for a good ~4% return, which will end up being ~5.5% if it was in a taxable bond from what I've heard.

I might see why you are confused though because somehow, my OP didn't show up on my reply. For reference, it is post #291 of this thread.

Ok, haha, I was seriously confused. then yes, if you are using it for a house, a bond fund is much more suitable. You don't want to lose principal.

Managed Futures, Managed Futures, Managed Futures. ...It is an uncorrelated asset class. Some programs are non-directional making it easy to make $ in all market conditions. The majority of these programs kicked ass in 2001, 2002 and 2008 when equities did horrible. Not to mention they did will in the other years as well. Definitely the most over looked and under-rated asset class which deserves more attention. It is actually the fastest growing industry in wall street...and has been since 2002. Surprisingly though, most investors either novice or expert simply are not educated on the Industry. Before throwing your money into a mutual fund or the stock market just remember that over the last 10 year time frame the avg mutual fund or stock portfolio is down around 2%...with multiple drawdown between 25 and 35 %.... Hows that for risk to reward ?
Before throwing your money away at least do some due diligence on the industry I just mentioned. ...just my 2 cents.

Is it truly an uncorrelated asset class? Maybe you should look up some statistics in the last 20 years, come back, and we can go over your opinion.

People like you crack me up.

-Wil

I have no idea what the hell this means.

i'm 18
From the USA
Have about 15k I want to invest
Risk tolerance-moderate
Timeframe- w/e is optimal
Occupation- Student/pokerplayer

I was thinking of putting 10k into stocks, but wasn't sure which and 5k into a roth IRA for retirement. I really need some help and am open to anything. fwiw I just made a TD Ameritrade stock and IRA account.

Don't worry, neither does he.

He just wanted to sound smart bringing up something that not many people know about. Typical internet troll crap.

-Wil

You can invest in the general market, buying large cap mutual funds, which will give you about moderate risk. Or you can buy 5 individual stocks, trying to pick what you think is best, which may bring you better return, but in turn raises your risk.

Or you can do what I do and buy stocks hoping to hit home runs. Like when I bought Citigroup at 1.50 cents, and its now at 4 dollars. Or when I bought FNM at 1.80 and its not at 1 dollar. One was x3 my money, and one was -50% my money. More risk, more reward, but the losses can be brutal. By nature, I'm a gambler ,so I'd rather take shots.

Right now, I like Visa (V), Citibank (C), Goldman (GS I think). I also own FNM and AIG, but I wouldn't go so far as to recommend them. Visa I liked from the day it opened at 45 dollars (shot up to 90) and AMD I wanted to buy at 2 dollars but my friend talked me out of it. That would have been one of my best buys..... sigh


-Wil

On to the roth IRA, I have no clue even what it really is w/o all this fancy talk. I heard it was good, is it simple to do, or do I pick where my $ is going?

USA
32K with about 18-21K needed for living expensives
Moderate to high
6yrs +
12K in school loans
I'll be a graduate student in the fall. I have around 2.5K sitting around for the summer which I won't need.

I don't get what managed futures are, is he talking about hedge funds?