OT: Investing - Stocks/Mutual Funds/Bonds/Crypto

[midranger]

Maxing out a 401K is incredibly difficult for people in their 20's. The max is $18,500 so if you're making $40K that's almost half your income. At the very least put in as much as your company will match then work your way up to 15% and go up from there as time goes by. If you get a raise don't buy a new TV, add another percentage point to your 401K. It all depends on your spending habits too but remember that sometimes putting more into a retirement plan forces you to be more budget conscious.

No doubt. However, I wouldn’t start saving outside of that until it is maxed out. For most working people with decent jobs, their biggest expense is their tax bill. 401k allows you to lower that bill while saving, typically in vetted funds.

[Finn]

I love reading this thread as I work in the accounting field and am usually browsing yahoo finance daily.

I'm 27, have a 3k emergency fund sitting in a money market (only .11%), contributing to my companies 401k (not maxing it out - only on pace for contributing 4k compared to the max of 18k), no cc debt, student loans paid off, no disability insurance, and have a car loan of about 8k.

My question is what advice anyone would have on what to do next. I've been looking at a few stocks to invest in and Canopy has been really catching my eye. I'm hoping for it to go below 20 until I throw money into it but I'm wondering if that is even a smart move. Is there something I need to be doing first? I've been reading that I should just throw my money into a vanguard index fund and watch it build up. I realize that that is probably much safer but I know there are a few of you who are watching the marijuana stocks pretty closely and would love to hear your thoughts.

I am new to this but my coworker has just started putting money into stocks through fidelity and has made a decent amount of money in just a few short weeks so it has me thinking that I should get in on this.

Check your benefits to see if your company offers any disability coverage.

My wife had a brain tumor when I had been laid off from my job. She was out of work for 4 months. Fortunately, her company provided disability pay of 66% of her normal pay which allowed us to basically maintain our normal standard of living with just slight belt tightening.

As midranger keeps telling everyone, disability coverage of some sort if very important because **** happens, usually at the worst time.

[nyrfan28]

it's good to see lots of great advice here for those looking to start saving and investing.

for those of you just starting out, i strongly recommend opening and using a high yield online savings account. here are links to ally's and capital one's accounts that offer 1.75% apy (crushes your bank's savings account rates and comes close to current CD rates).

https://www.ally.com/bank/online-savings-account/
https://www.capitalone.com/bank/savings-accounts/online-money-market-account/

if you're trying to get savings going, open one of these accounts (there are others available, too) and set them up to automatically deduct whatever amount you can afford to save from your bank account on payday or have some portion of your paycheck direct deposited into the account. don't get any checks/debit/credit cards for these accounts.

ultimately you force yourself to save every month, the rate of return is about as high as you can get for a savings account and you can still withdraw from the account, as transfers take 2-3 business days to process. that slower withdraw time period makes you think about "splurge" purchases a bit more but still ultimately gives you access to cash when you need it.

use this approach and after a year or so, you'll have a nice emergency fund of cash that also provides a decent return every month.

[HaroldinGMinor]

Maxing out a 401K is incredibly difficult for people in their 20's. The max is $18,500 so if you're making $40K that's almost half your income. At the very least put in as much as your company will match then work your way up to 15% and go up from there as time goes by. If you get a raise don't buy a new TV, add another percentage point to your 401K. It all depends on your spending habits too but remember that sometimes putting more into a retirement plan forces you to be more budget conscious.

No doubt. However, I wouldn’t start saving outside of that until it is maxed out. For most working people with decent jobs, their biggest expense is their tax bill. 401k allows you to lower that bill while saving, typically in vetted funds.

Ah, gotcha. That makes sense.

[Iheartfootball]

I’m not trying to be a dick. But 1.75% crushes nothing. It’s like free.




Sent from my iPhone using RealGM Forums

[midranger]

1.75% is nothing to sneeze at for your cash position. Much better than traditional savings accounts and certainly checking. Offers some inflation protection. I sense a correction looming (I know, I’m not smarter than anyone else, all guessing), so my thought is it’s not a bad time to build a strong cash position. When (if) things tank, then buy. In the meantime 1.75 is better than a kick in the nuts.

[BUCKnation]

I put all my excess money in a 1.75% Ally account. They've bumped it up from a flat 1% over the past couple of years I've had it, so I'd imagine they'd keep raising it in the future.. At the moment, I'm put most of my pay check in there for saving, but I like having the current amount in there just in case I need quick access to it. My situation is kind of up in the air in just over a year from now and I'll need that fund for quick access when I get an apartment or get a car.

[chile]

Maxing out a 401K is incredibly difficult for people in their 20's. The max is $18,500 so if you're making $40K that's almost half your income. At the very least put in as much as your company will match then work your way up to 15% and go up from there as time goes by. If you get a raise don't buy a new TV, add another percentage point to your 401K. It all depends on your spending habits too but remember that sometimes putting more into a retirement plan forces you to be more budget conscious.

No doubt. However, I wouldn’t start saving outside of that until it is maxed out. For most working people with decent jobs, their biggest expense is their tax bill. 401k allows you to lower that bill while saving, typically in vetted funds.

Ah, gotcha. That makes sense.

Contributing to your 401k only lowers your tax bill if you are in a traditional 401k/IRA. Most (if not all) people in their 20's should be contributing to a Roth though.

Factor in the standard deduction is now 12,000 (single filer) and you have to contribute more than that to take advantage of the tax situation. For example, if you put in 10,000 dollars to a traditional 401k, you take the standard deduction of 12,000. Now if you put that 10,000 into a Roth, you still take the standard deduction come tax time and you basically aren't pay taxes on that 10k anyways. Why not contribute to a Roth in the beginning and not pay taxes when retirement comes around?

To go beyond this, if you can invest in an income generating, long term investment (real estate) I would do that. You get supplement income while reducing your tax bill now. Selling/depreciation recapture is a different story and make sure you plan for it.

[wapith]

No doubt. However, I wouldn’t start saving outside of that until it is maxed out. For most working people with decent jobs, their biggest expense is their tax bill. 401k allows you to lower that bill while saving, typically in vetted funds.

Ah, gotcha. That makes sense.

Contributing to your 401k only lowers your tax bill if you are in a traditional 401k/IRA. Most (if not all) people in their 20's should be contributing to a Roth though.

Factor in the standard deduction is now 12,000 (single filer) and you have to contribute more than that to take advantage of the tax situation. For example, if you put in 10,000 dollars to a traditional 401k, you take the standard deduction of 12,000. Now if you put that 10,000 into a Roth, you still take the standard deduction come tax time and you basically aren't pay taxes on that 10k anyways. Why not contribute to a Roth in the beginning and not pay taxes when retirement comes around?

To go beyond this, if you can invest in an income generating, long term investment (real estate) I would do that. You get supplement income while reducing your tax bill now. Selling/depreciation recapture is a different story and make sure you plan for it.

But you don't deduct 401k contributions like you would mortgage interest... the money is pulled from your take-home pay, reducing your taxable income. In your example, you take the standard deduction either way, but with the traditional 401k your tax bill is lower now because your taxable income is less. Right??? Or am I off-base here? You have me questioning things I thought I knew.

[sidney lanier]

1.75% is nothing to sneeze at for your cash position. Much better than traditional savings accounts and certainly checking. Offers some inflation protection. I sense a correction looming (I know, I’m not smarter than anyone else, all guessing), so my thought is it’s not a bad time to build a strong cash position. When (if) things tank, then buy. In the meantime 1.75 is better than a kick in the nuts.

I agree with both your points. 1.75% is not nothing. Play around in Excel with some of the financial functions and you'll see how it will grow.

I also agree on a looming market correction and, more importantly, a broader downturn in the economy. We've been in expansion mode for nine years, which is rare. A tree doesn't grow to the sky, as they say.

[Iheartfootball]

1.75% is nothing to sneeze at for your cash position. Much better than traditional savings accounts and certainly checking. Offers some inflation protection. I sense a correction looming (I know, I’m not smarter than anyone else, all guessing), so my thought is it’s not a bad time to build a strong cash position. When (if) things tank, then buy. In the meantime 1.75 is better than a kick in the nuts.

I agree with both your points. 1.75% is not nothing. Play around in Excel with some of the financial functions and you'll see how it will grow.

I also agree on a looming market correction and, more importantly, a broader downturn in the economy. We've been in expansion mode for nine years, which is rare. A tree doesn't grow to the sky, as they say.

How it will grow? Cash is not for growth. You really shouldn't have much in cash (emergency funds) unless you're getting ready to retire.

[HaroldinGMinor]

1.75% is nothing to sneeze at for your cash position. Much better than traditional savings accounts and certainly checking. Offers some inflation protection. I sense a correction looming (I know, I’m not smarter than anyone else, all guessing), so my thought is it’s not a bad time to build a strong cash position. When (if) things tank, then buy. In the meantime 1.75 is better than a kick in the nuts.

I agree with both your points. 1.75% is not nothing. Play around in Excel with some of the financial functions and you'll see how it will grow.

I also agree on a looming market correction and, more importantly, a broader downturn in the economy. We've been in expansion mode for nine years, which is rare. A tree doesn't grow to the sky, as they say.

How it will grow? Cash is not for growth. You really shouldn't have much in cash (emergency funds) unless you're getting ready to retire.

If you are saving for something with a shorter time frame cash is a good place to be. So for example, let's say you're getting married in a year putting money into stocks is kind of risky. You could lose 20% or more over that time frame. Cash gives you the security of knowing your balance won't drop over a short time period.

[HaroldinGMinor]

No doubt. However, I wouldn’t start saving outside of that until it is maxed out. For most working people with decent jobs, their biggest expense is their tax bill. 401k allows you to lower that bill while saving, typically in vetted funds.

Ah, gotcha. That makes sense.

Contributing to your 401k only lowers your tax bill if you are in a traditional 401k/IRA. Most (if not all) people in their 20's should be contributing to a Roth though.

Factor in the standard deduction is now 12,000 (single filer) and you have to contribute more than that to take advantage of the tax situation. For example, if you put in 10,000 dollars to a traditional 401k, you take the standard deduction of 12,000. Now if you put that 10,000 into a Roth, you still take the standard deduction come tax time and you basically aren't pay taxes on that 10k anyways. Why not contribute to a Roth in the beginning and not pay taxes when retirement comes around?

To go beyond this, if you can invest in an income generating, long term investment (real estate) I would do that. You get supplement income while reducing your tax bill now. Selling/depreciation recapture is a different story and make sure you plan for it.

I put money into both a Roth and a traditional 401K. I have no idea what the tax rates will be when I retire. I might be paying less than I am now. Some people probably are paying less now than 20 years ago after the last round of tax changes.

[REDDzone]

1.75% is nothing to sneeze at for your cash position. Much better than traditional savings accounts and certainly checking. Offers some inflation protection. I sense a correction looming (I know, I’m not smarter than anyone else, all guessing), so my thought is it’s not a bad time to build a strong cash position. When (if) things tank, then buy. In the meantime 1.75 is better than a kick in the nuts.

I agree with both your points. 1.75% is not nothing. Play around in Excel with some of the financial functions and you'll see how it will grow.

I also agree on a looming market correction and, more importantly, a broader downturn in the economy. We've been in expansion mode for nine years, which is rare. A tree doesn't grow to the sky, as they say.

How it will grow? Cash is not for growth. You really shouldn't have much in cash (emergency funds) unless you're getting ready to retire.

Everyone needs a little cushion. How much is unique to that person and their risk tolerance. I like to keep around ~6 months expenses in cash. As a decently high income family with two kids, I'd rather that pile of cash be earning 1.75% with a Capital One money market than zero point nothing with my brick and mortar bank.

Also works well for savings goals with short term (<3 years) time horizons like house down payments.

[MickeyDavis]

Very true that no one knows where tax rates will be when they retire. I always figure they'll be higher. But my retirement income will be lower than my current income. But it all depends on the rate I pull it out. It's a crapshoot. Right now I'm able to max out both 401k and Roth.

[SirChurros]

I have some money my grandpa left me when he passed that I want to invest. Looking at long-term growth mutual funds. I've been told to look at American Funds but all the good ones I've researched are closed to new investors.

Any good alternatives? I'm 31, so I'm ok with being a little bit aggressive.

[Iheartfootball]

I agree with both your points. 1.75% is not nothing. Play around in Excel with some of the financial functions and you'll see how it will grow.

I also agree on a looming market correction and, more importantly, a broader downturn in the economy. We've been in expansion mode for nine years, which is rare. A tree doesn't grow to the sky, as they say.

How it will grow? Cash is not for growth. You really shouldn't have much in cash (emergency funds) unless you're getting ready to retire.

Everyone needs a little cushion. How much is unique to that person and their risk tolerance. I like to keep around ~6 months expenses in cash. As a decently high income family with two kids, I'd rather that pile of cash be earning 1.75% with a Capital One money market than zero point nothing with my brick and mortar bank.

Also works well for savings goals with short term (<3 years) time horizons like house down payments.

Me too. But what I'm getting at is 1.75% is not much. Original post was that 1.75% crushes, no it doesn't. Before the recession rates were over 3% or higher. Even that doesn't crush. 8-10% compounding on half a mill crushes. 1.75% is safe - which is what cash should be. I just hate to hear that a money market or checking/savings rate crushes like you should expect income from it.

[REDDzone]

How it will grow? Cash is not for growth. You really shouldn't have much in cash (emergency funds) unless you're getting ready to retire.

Everyone needs a little cushion. How much is unique to that person and their risk tolerance. I like to keep around ~6 months expenses in cash. As a decently high income family with two kids, I'd rather that pile of cash be earning 1.75% with a Capital One money market than zero point nothing with my brick and mortar bank.

Also works well for savings goals with short term (<3 years) time horizons like house down payments.

Me too. But what I'm getting at is 1.75% is not much. Original post was that 1.75% crushes, no it doesn't. Before the recession rates were over 3% or higher. Even that doesn't crush. 8-10% compounding on half a mill crushes. 1.75% is safe - which is what cash should be. I just hate to hear that a money market or checking/savings rate crushes like you should expect income from it.

Crushes may have been a bit much but I moved to an online money market last year and now make twice as much interest PER MONTH than I did in the entirety of the prior year from my brick and mortar. So as long as its not time consuming and you don't have to constantly be moving money back and forth, etc. then its definitely worth it IMO.

[KidA24]

I have some money my grandpa left me when he passed that I want to invest. Looking at long-term growth mutual funds. I've been told to look at American Funds but all the good ones I've researched are closed to new investors.

Any good alternatives? I'm 31, so I'm ok with being a little bit aggressive.

https://www.reddit.com/r/personalfinance/wiki/windfall

[machu46]

I have some money my grandpa left me when he passed that I want to invest. Looking at long-term growth mutual funds. I've been told to look at American Funds but all the good ones I've researched are closed to new investors.

Any good alternatives? I'm 31, so I'm ok with being a little bit aggressive.

I'd recommend looking into ETFs; they share a lot of the same qualities of mutual funds while generally having far lower fees involved. Depending on who you're investing through, you can get access to certain ETFs without paying a fee on the trading cost too (i.e. if you invest through Schwab, you can invest in Schwab ETFs without paying the usual $4.95 commission. Along with investing in some individual stocks, I've invested in a bunch of the Schwab ETFs along with a couple overseas ETFs and SPY (which is basically the S&P 500 mutual fund in ETF form).