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 Message Boards » » Long Term (non-retirement) investing.. Page [1]  
Kainen
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I'd like some thoughts around how I invested some money recently, any feedback or insight or thumbs up will be helpful in tweaking what I'm doing. Welcome all opinions.

Last year I received some PRE IPO stock that really delivered and netted me 60-70K gain. I was able to take a portion of that and pay all off all consumer debt, sans low % student loans. I also put away 6 months of emergency funds just in case. I took 35K and went to Vanguard and setup a money market account that would fund the following:

30% VTSMX (stocks)
20% VGTSX (intl. stocks)
50% VBMFX (bonds)

Does this seem sound to you guys? This is the first time I've been taking this seriously....I don't know enough about the stock market but want something sort of conservative/balanced

4/21/2012 3:22:45 PM

LastInACC
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Bump.

I want to do some investing similar to a 401K type where each month I would have a automated transfer to the account. Can someone introduce me something similar.

6/4/2014 3:08:01 PM

OmarBadu
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too heavy on the bonds - go to bogleheads.org and read the lazy guide to investing

6/4/2014 9:44:59 PM

theDuke866
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yeah, i mean, it depends on your purposes and how long-term you mean, but my initial reaction is that it's way too heavy on the bonds.

6/5/2014 12:03:02 AM

LastInACC
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My strategy is to have an investment account for about 5+ years. My investment goal is for a house and I want to have an automatic deposit similar to a 401k. I am willing to take risk but not so much fees/taxes.

6/5/2014 10:41:54 AM

David0603
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OP: Waaaaaaaaaaay too heavy in bonds
^ Have you looked into a low cost roth ira via Vanguard?

6/5/2014 10:44:22 AM

LastInACC
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I'm pretty new at stock let alone bonds. lol. I googled "too heavy in bonds". Does it mean put capitals into bonds?

Quote :
"Have you looked into a low cost roth ira via Vanguard?"
I can invest in roth IRA even if it's not for retirement?

[Edited on June 5, 2014 at 11:39 AM. Reason : ']

6/5/2014 11:19:20 AM

wlb420
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technically you can, but you have to pay taxes + penalty on any gains you withdraw, so practically you can't

if you're investing specifically to grow your money for a house in 5 years, you'd better be careful...if most of your money is in the market and there's a moderate to severe downturn at the 4.5 year mark, your plans might go up in smoke.

6/5/2014 11:57:27 AM

David0603
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Quote :
"My investment goal is for a house"


Quote :
"Up to a lifetime maximum $10,000 in earnings withdrawals are considered qualified (tax-free) if the money is used to acquire a principal residence for the Roth IRA owner. This principal residence must be acquired by the Roth IRA owner, their spouse, or their lineal ancestors and descendants. The owner or qualified relative who receives such a distribution must not have owned a home in the previous 24 months."

6/5/2014 1:34:23 PM

wlb420
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^there is the 5 year rule, so that might be possible if they start now, but if you're opening a new Roth, you'd probably be better served to leave that money in there to grow as opposed to using it for a house.

[Edited on June 5, 2014 at 1:53 PM. Reason : .]

6/5/2014 1:51:19 PM

David0603
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Yeah, I plan on scaling back my risk exposure five years before I need to tap any of my investments, not the other way around...

6/5/2014 2:01:18 PM

wlb420
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^that 5 year rule too, but the IRS has a 5 year rule regarding the withdrawal of funds in a roth (i.e. the account must be open for more than 5 years, or the tax + penalty applies, regardless of the reason for withdrawal).

Basically no qualified withdrawals for any reason if the account hasn't been open for 5 years.

6/5/2014 3:58:47 PM

NCSUMEB
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^ that applies to earnings inside the roth, basis dollars can be withdrawn at any time as they have already been taxed.

6/5/2014 4:15:14 PM

neodata686
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Yeah you can take out whatever you put into a roth with no penalty.

6/5/2014 4:27:45 PM

wlb420
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indeed, you have to get into the growth for it to even be considered a distribution, but if youre just planning on taking out your contributions in 5 years, whats the point?

6/5/2014 4:29:16 PM

NCSUMEB
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It depends on how financially comfortable you are. If you've maxed out your roth and company 401k and still have money left over to store away for an emergency/big purchase then you're fine and you would just dip into that if you needed it. If you are not able to contribute the max, then your roth can act like an emergency fund for the basis dollars if you don't keep anything in savings/mm.

6/5/2014 4:45:56 PM

wlb420
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I dont necessarily disagree for a little here and a little there, but

Quote :
" but if you're opening a new Roth, you'd probably be better served to leave that money in there to grow as opposed to using it for a house"


You never get to re-contribute that money you take out, and the average mortgage rates now are way less than the average market return

6/5/2014 7:11:21 PM

CalledToArms
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My "non-retirement" accounts actually still are for retirement but they just happen to be the funds we can dip into if needed (penalty free since it is not in a tax-advantaged retirement fund) for emergencies or if we made some very large purchase if that makes sense. I'm just not one that likes to have too many separate "buckets" so I keep it all in one.

We have our 401ks through our work and then we both utilize Roth IRAs via Vanguard (I just use 2050 funds there and auto-invest) in terms of stuff that is officially (for tax reasons) "retirement." Outside of that I have a little play money at etrade for individual investments but the rest of our long term investing is at Vanguard.

Our "non-retirement(but really for retirement)" account mostly is broken down like this: (it's a lazy, 4-fund portfolio):

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares
VTIAX Vanguard Total International Stock Index Fund Admiral Shares
VSGAX Vanguard Small-Cap Growth Index Fund Admiral
VBTLX Vanguard Total Bond Market Index Fund Admiral Shares

Their expenses are really low, especially at the Admiral level. I've been debating adding in the Vanguard REIT Index Fund for a 5th and just a little more diversification. I really thought about it about 6 months ago and I should have because it has been on a good run.

I auto-invest in each of those each month and have for several years now.

[Edited on June 6, 2014 at 8:55 AM. Reason : ]

6/6/2014 8:52:40 AM

CalledToArms
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actually I'll follow up and say that after thinking about this some more today, I think I am going to just throw $10k into the Vanguard REIT fund to get the Admiral shares and then move toward this ratio when I re-balance next year:

30% VTSAX Vanguard Total Stock Market Index Fund Admiral Shares
20% VTIAX Vanguard Total International Stock Index Fund Admiral Shares
20% VSGAX Vanguard Small-Cap Growth Index Fund Admiral
20% VBTLX Vanguard Total Bond Market Index Fund Admiral Shares
10% VGSLX Vanguard REIT Index Fund Admiral Shares

The key with these so-called Lazy Portfolios though is not messing with them too much. Other than re-balancing once a year or so, you're better off not trying to tweak them to try and react to the day-to-day or even quarter-to-quarter market changes. The idea behind them is getting a semi-diversified fund in a ratio that has some logic and that you are comfortable with and then just letting it run its course. The whole idea of the diversification based on historical performance is so that you don't have to constantly react to the market. The more you try and "react" the more you possibly throw off the diversification.

[Edited on June 8, 2014 at 12:10 PM. Reason : ]

6/8/2014 12:05:41 PM

David0603
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Throwing another $500 in lending club.
No defaults/late payments thus far but some prepayments kind of screwed me.

6/9/2014 4:25:53 PM

CharlesHF
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Quote :
"No defaults/late payments thus far but some prepayments kind of screwed me."

Different, being on the other side of the desk now, hey?

6/9/2014 4:57:35 PM

David0603
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Damn deadbeats were supposed to keep making 18% payments to me. Fwp

6/10/2014 12:08:31 AM

LastInACC
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Good stuff. With the Vanguard account can I setup for them to take out of my paycheck like my employer's 401K plan?

6/12/2014 11:57:28 AM

CalledToArms
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401k is different since it is a pre-tax investment. I just have an auto-draft from my checking account. I believe some banks can still do some of that after-tax pulled straight from your pay-check (and some employers let you split where you direct deposit goes) but to me it is just easier to let it all deposit into my checking and auto-distribute it from there. If I want to change anything I don't have to worry about going through HR or payroll etc.

One autodraft for my Roth IRA, one for my wife's Roth IRA (because they have to be separate) and then we have one auto-draft into our regular investment account.

[Edited on June 12, 2014 at 1:22 PM. Reason : ]

6/12/2014 1:21:02 PM

dtownral
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it can still be taken out of your paycheck post-taxes, as long as your employer doesn't mind

6/12/2014 1:22:32 PM

CalledToArms
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I just don't see much of a personal advantage to that.

6/12/2014 1:28:47 PM

David0603
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Yeah, I do weekly withdrawals to vanguard via my secu account.

6/12/2014 1:33:06 PM

quiksilver
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I think calledtoarms has the mix right for a set it and forget it type of account. I would, however, make one adjustment. Find a strategic bond fund for the next few years as opposed to a total bond market fund. Owning the index is a losing bet for bonds right now. Yields suck and interest rates will rise forcing prices down. Particularly on the long end of the curve. Strategic Funds allow an experienced manager to make the calls and have done well at navigating interest rate moves.

The duration of Vanguard Total Bond is 5.62. This means that for every 1 point of interest rate increase you can expect the principal to drop 5.62%. With it only yielding 2.5% this is not an area I would want to be.

6/13/2014 8:46:10 AM

David0603
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I'd ditch the bonds all together, but that's just me.

6/13/2014 9:07:12 AM

quiksilver
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Not a bad idea. We have become very lean on bonds. Risk vs reward is just not there. That said, if you must own fixed income own the right instruments or you are guaranteed to lose when interest rates wake up.

6/13/2014 9:22:32 AM

lewisje
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Bitcoin, man

Bitcoin

6/15/2014 4:39:12 AM

CalledToArms
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If you have any recommendations on a potentially better bond fund I'm open to suggestions. I'm sure there are plenty, I just don't have intimate better knowledge and stuck with low-expense index funds across the board including the bonds portion of my portfolio. I have considered cutting out bonds altogether too but I just don't know if that's the right long-term strategy with the type of account I have set up.

6/15/2014 10:18:02 AM

quiksilver
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^PM Sent

6/20/2014 3:27:04 PM

David0603
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Set up another 1K xfer to lending club
Still too early to tell how well I'm doing but the site says 15.69%

6/20/2014 4:22:44 PM

David0603
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Down to 12.79% 2 of 234 notes are now in grace period

7/10/2014 9:49:22 PM

David0603
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3 more notes in grace period, but 1 of the original 2 is now current
I think July 4th may have caused some delays, but trying to decide if I should just dump the old grace period note before it becomes late
I see now 1 of the remaining 4 is on a payment plan whatever that means
Also, bought some Whole Foods today

[Edited on July 14, 2014 at 1:54 PM. Reason : ]

7/14/2014 1:52:13 PM

Str8BacardiL
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http://money.usnews.com/funds/mutual-funds/real-estate/fidelity%C2%AE-real-estate-investment-portfolio/fresx

11/30/2014 3:14:27 AM

Dentaldamn
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Work until you are dead

11/30/2014 9:27:32 AM

Str8BacardiL
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what if I buy 1-2 rental properties a year and put enough down to get decent cash flow

seems like ROI will be better than any stock

what say you?

12/1/2014 12:08:11 AM

OmarBadu
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hard to say it'll be better than any stock - it's a bit of a guessing game without more details but diversifying by not only investing in the stock market isn't a bad idea - lots of outside variables you can't control much like the stock market - it's fairly easy to start small and build but be ready to account for the growth especially if planning for 2 per year

we rent our townhome and i'd consider renting out the house we live in now if it made sense when we move out but more than likely will sell it when it comes time

what are the gains you are estimating after accounting for repairs / issues?
how much are you putting down (investing) and how much time is spent to get those gains - what's the expected return rate?
are you able to write down all of the income via depreciation?
at what point do you have enough rental properties that you'll need to have someone manage them and the accounting side?
is there a point, and if so what is it, where the repairs become too much and it makes more sense to sell as opposed to continue to rent?

plenty more to account for but that's a decent start

12/1/2014 9:19:25 AM

jbrick83
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If you can afford to hold onto the properties for a while, it's a no-brainer.

12/1/2014 9:45:29 AM

David0603
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I'll probably rent my place out if I move however I def prefer the liquidity of stocks.

12/1/2014 12:01:28 PM

jbrick83
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I'd ultimately like to have 4 or 5 properties by the time I retire (either paid off or very close to being paid off). Sell most of them off in the years proceeding my retirement for large lump sums (maybe "live" in each one for a few years and try to get around capital gains), but keep one or two as a source of income so I'm not just draining my retirement savings. A lot depends on your particular housing market, but its a great idea if you can get solid properties.

Of course, that's a lot easier said than done, but I should have one rental property ready in the next 6 months. One down...four to go.

12/1/2014 12:38:17 PM

OmarBadu
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would anyone entertain investing in something like http://subseaengineeringinc.com/ in hopes that it would pay off down the road at some point

12/4/2014 10:58:26 AM

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