SirMario66 wrote:Hello all.
I'm seeking advice on how to manage my money in the stock market since I'm new at it. I'm 22, graduated college last may, and started working in
I set up a Roth IRA soon after employment and plan on matching the contribution. My portfolio is currently total stock market index, total international, and once I have enough I want to add total bond index and REIT index.
My question is about a general savings account. I want to open up another account with vanguard that I can withdraw at any time. Should I approach my portfolio the same way as I do with my Roth with index funds mostly? I figure I'm saving up for a house or something down the road but I probably won't need the money for a few years. I'm pretty happy with my return on the Roth but I was just wondering if there's a different strategy for general savings. Thank you
Also, I had a question about paying off student loans. I currently have 2 loans: one is $1500 at 5% interest and the other is $16000 with 3%. Everyone says always pay off the one with larger interest but I don't see how that benefits me that much bc I'm only paying 8 or 9 bucks on the $1500 one per month. So most of my payment goes to that one. The $16000 I only do the minimum payment but I'm paying $50 interest every time. Is it worth paying off the larger one to pay less interest in the long run?
First - congratulation. Putting money into retirement at 22 is damn smart, and will make your future life considerably easier.
Second - as much as I hate the long threads, the 30something pages of this one is pure gold. Very little politics, a lot of rational advice for investors.
Third - and this is by no means an investment advice, just a description what I myself have been doing (and would do with even stronger conviction if I were younger than my current 40something): The issue of stocks vs. bonds for retirement portfolios has been discussed numerous times in this thread, even with data. I actually showed here that the worst 30-year annual rate of return for stock investment beats the best 30-year annual rate of return for bond investment. In other words - if I had more than 30-year investment horizon, I would NEVER put bonds into my portfolio (in fact, I still don't have any bonds as of now, and I'll probably wait until my 50s to rebalance). In fact, I would be tempted to slightly overweight riskier stocks (which, once again, I do even now), and so in addition to diversified US stock fund, and diversified international stock fund, I would consider small-cap US and emerging market funds. I don't think real estate needs to be considered. I do put a miniscule number of dollars into this: http://www1.tiaa-cref.org/public/perfor ... /1009.html
. But it's more of a curiosity factor because if you look how the fund evolved over the last 10 years...
Fourth - for my personal portfolio - I am considerably more conservative. The "5-year horizon" that "columbia" poster mentioned above is a pretty good start to think about it. Bonds (both investment and junk) are a sizable portion of my personal portfolio. [In addition to opening Vanguard account, I would actually also open a TD Ameritrade account. TD Ameritrade offers no-fee investment in 101 ETFs. There are some interesting ETFs (junk bonds, international treasuries) that TD Ameritrade has, but VAnguard doesn't.]
Firth - the loan: So, basically you have fixed $X that you hold after paying the interest on both loans. Therefore, the $X will be applied toward the reduction of the principal. Now, do you want to reduce the $X worth of the principal that grows by 5% or by 3%? No brainer IMO.