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Where does a young guy start investing money?
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Cat33
Posted 10/13/2021 18:07 (#9267243 - in reply to #9267214)
Subject: RE: Where does a young guy start investing money?


NE SD
ruralHusker - 10/13/2021 17:48

get familiar with bogleheads.org -- simple investing for all. Their wiki pages have instructions on how to create a super simple investment plan that takes no effort and you do not need to pay a money manager.

You want simple investing. Set and forget. Don't listen to the noise about the economy or the state of things. There's always a crisis, the media insists on it. There will be up times and down times. Just keep adding money continuously and you'll see growth. Do you think the stock market will be LOWER when you retire than it is today? If yes, avoid it. If no, get your money working for you and check on it each decade.

Do a 401k first up to the company match.
Then do a Roth IRA to the annual limit ($6000) (I recommend one of the big brokerages like Fidelity, vanguard, or schwab)
then back to the 401k up to the annual limit ($19,500)
then open a taxable brokerage account to add whatever extra you want (this can be accessed anytime)

If you're a young guy you have 40-50 years+ of investing, so do all index stock funds. sp500 index fund or a total market index fund. or a target date fund if you want a little bonds and really don't understand investing. Age minus 10 or 20 in bonds is a good idea as you get older. So once you hit 40 you could have 70-80% in stock funds, 20-30% in bond funds. Bonds don't return squat right now, but it helps keep your balance stable during a stock downturn. Also, don't look at the balances. Just add, and check it in 10 years to see what you got. Young guys don't really bond funds, you've got time on your side and can afford a little market drop once in a while. In fact you're better off if the market does drop so you can add more shares at lower prices and it'll have all those decades to grow.

If your 401k choices are poor, pick the LOWEST COST fund you can. Fees/costs will kill your returns. That's why index funds are so great, fees are super low. And the vast majority of managed funds cannot beat their comparative index over time anyway, so why pay the fees to under perform?

Keep adding. By the time you retire you'll likely be a millionaire many times over.


Pretty much all of the above.

Absolutely do a company match up to the limit. Free money and all. If you have the option of a Roth 401k, do that. Yes it’s after tax dollars, but as of now it’s tax free on all gains.

Forget about individual stocks for now, as stated in another post. ETFs, index funds, etc are the way to go for you right now to get returns IMO.

I differ a little from others in what type of account to use after maxing out a Roth. Most prefer tax deferred, I prefer taxable so I can access the money any time I want without penalty. I set my dividends and capital gains to go to a money market account, and I take what I will need to pay in taxes out of that. I turn around and reinvest the rest back into the funds right away after figuring the taxes out. Essentially it’s a DRIP, just done manually the same day.

Don’t worry about diversifying too much now. VOO and VFIAX track the S&P. Or if you want even less risk, VGSTX, a fund of funds that carries some bonds. Won’t perform as well though.

Set and forget for now.
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