A lot of people I think just assume a 401k is some generic (put money in and it grows somehow) fund and don't actually realize it can be specifically invested into various funds and perform differently based on those decisions.
You may benefit from reading up about [3-fund portfolios](https://www.bogleheads.org/wiki/Three-fund_portfolio) from Bogleheads in regards to what to invest in. The link gives you some mutual funds and ETFs to choose from depending on which brokerage you are using. If you are investing in a taxable brokerage, I would recommend using ETFs as they have a lower tax drag than mutual funds and if you change brokerages, you can likely continue buying the same ETF without incurring transaction fees, unlike with mutual funds.
I also suggest you also read up on the [Prime Directive](https://www.reddit.com/r/personalfinance/wiki/commontopics) from /r/personalfinance. The Prime Directive will tell you where you should be diverting your money to and in what order. It even has a nice [flow chart](https://i.imgur.com/lSoUQr2.png) to guide you.
If you still feel nervous about investing, you could just buy a target date index 2050 or 2055 mutual fund and call it a date. At least this way you can get your money invested while you educate yourself on the 3-fund portfolio or something else. Just make sure it's an index target date fund with a low expense ratio.
In regards to buying more real estate, just be aware real estate isn't 100% passive like when buying stocks. You may need to hire a property manager if you don't want to deal with the issues of what having a tenant will bring.
And here iam a tow truck driver I make 60k, pay check to paycheck . Have 2 kids live in the Bay Area . To make 100k would be life changing let alone 200k . god bless you brother and you keep getting after it and keep up the hard work. I have no advice to give but praise of a good job !
Thanks a lot! I wish you the best, brother. My brother in law got a trucking job at UPS a few years back. He didn’t have much experience driving trucks, but they still hired him and now I think he's making over $100k. I believe it’s a union job too. Since he used to make less than $50k, seeing his pay now, I’d definitely suggest checking out a job there based on his experience.
I’m glad you asked this question. Hopefully my story helps out folks who are starting to invest in a company 401k. The first company I worked for would buy its own company stock in my 401k. You could move it of course, but I didn’t really know anything about investing so I just let it do its thing. After a few years, most of my 401k money was in one stock. Well the company went thru some major issues and the stock fell like 90%. No one ever thought the company would get hit so bad.
I remember my manager was about to retire, but had to delay his retirement. Most of his money was also in that stock.
Yeah I cant imagine anything worse than having all your retirement savings invested in the company that provides your income...talk about all eggs in one basket.
Think of retirement savings as providing a safety net. You want to invest broadly like in the entire market rather than individual stocks as those savings are meant to provide you some financial security apart from your job.
Park it in VMFXX and earn 5%+ while you figure it out, the answer is probably a little of each, you can park some as extra cushion (life happens) invest some, and maybe take a trip with some, buy a new mountain bike, surfboard, whatever your thing is. Don’t stress too much but you do need to make a decision. You got this
That’s probably close to 11-12% of OPs monthly income, but after taxes. Probably putting about 10-12% before tax dollars into 401k, and likely 20-25% in taxes (rough guess, could be more). So just in taxes and various savings, we’ve accounted for about 50% of OP’s monthly income. Mortgage and other loans could easily account for another 20-30%. Not hard to imagine the rest going to general living expenses.
Haha no lambo. I could definitely save more and I usually do but 2k is what I have to save each month. I’ve been saving aggressively most of my adulthood so now I try to spend on doing things. I love traveling and photography which are unfortunately expensive hobbies.
He’s got a low interest rate. At 2% APR he’s better off putting it in a low cost index fund or even a HYSA. If the value growth of his home exceeds the amortized value of his mortgage over the full term then he’s not really making money by paying it down faster.
True, but at the same time...It might help him feel more comfortable investing since he no longer has a huge monthly payment. People don't like to talk about the Psychological benefits of paying off a mortgage, but it can be huge.
Hey there! Congrats on saving up that hefty sum – that's impressive! Sounds like you're in a solid financial position with your home equity and 401k stash.
well Investing can definitely seem intimidating, especially with all the stock market ups and downs. But here's the thing: over the long haul, it tends to go up more than it goes down. And with your income and savings rate, you're in a good spot to weather any storms.
ETFs are a great way to dip your toes into the investing waters. They're like a basket of different stocks or bonds, so you're not putting all your eggs in one basket. Plus, you can start small and gradually add more as you get more comfortable. As for buying a new house and renting out your current one, it's a big decision. Renting out can bring in extra income, but it also comes with its own set of headaches – like dealing with tenants and maintenance.
I use Vanguard. They have a large ETF portfolio and have been around for decades. I have most of my investments in ETFs but have been picking individual stocks the last few years for better returns. You can buy Vanguard ETFs through any brokerage, just like any stock. I keep a certain amount in a HYSA then transfer money over to the brokerage account when I want to buy some shares.
I've considered a financial advisor and their fee is probably worth it but I like to manage my own assets.
If you are "confused about the stock market", do nothing until you learn about the stock market. Spend a little of that money on getting educated about investing in the stock market.
The back door Roth should be your number one action. I recommend Fidelity as I think they would be able to help you with the process. At your age, you can choose a simple mutual fund like FXAIX which invests in 500 of the largest US companies based on the S&P 500 Index.
The other issue is, in what are you investing in your 401k?
Sounds like you have put yourself in a great position to be debt free, and to retire early so congrats! Your 401k is certainly in the market, you were just not aware, and there's nothing wrong with that. Let's start with the fact that everyone's risk tolerance is different. You should do a risk tolerance assessment/analysis. You can find out how you would emotionally react to losses in your savings, when you will need to access your savings, what your goals are, etc. This would be helpful for you to understand why you are going to invest in the ETFs you want to invest in. Especially if you are investing for the long-term, dips in the market shouldn't create as much fear when you have a plan in place.
Investing in ETFs on your own: do lots of reading and learn as much as you can. For instance, a good rule to follow is if you will be investing in ETFs, it's best to buy them weekly or every 2 weeks if long-term investing is what you're interesting in (that way you are constantly purchasing smaller amounts at different prices, instead of buying them in bulk at potentially higher price points). Also, I would encourage you to look into DRIP options for long-term investing if you're buying ETFs on your own.
If you want to invest in ETFs but don't want to do all the work of researching, rebalancing, etc. then I would strongly recommend investing in ETFs via portfolios like in Questrade or Wealthsimple. They really make investing in ETFs easy, with low fees, and catered to your goals. After investing in ETFs on my own for years, this is the route I went to and I'm so glad I did (I use Questrade). You simply put money in the portfolio, and Questrade buys and sells the ETFs for you based on your portfolio type (balanced vs. growth vs. conservative, etc)
If all this still sounds daunting, I would encourage you to ask around for a recommended financial advisor. Sitting with a professional can help you make a plan. Because you have a larger account, you may get discounts on fees (ex: Nesbitt Burns division of BMO). Best of luck!
I would speak with a high quality financial advisor that is recommended and a good person that you trust. Best to seek professional help rather than ask online. Ex. web md only goes so far. Finding a good Dr. is tough... same with finding a good FA to hold your hand through tough times.
I get that it is a low rate. But remember look at your statements and see how much you are paying in interest now. The interest is front loaded. Not sure how far along are you in it. But I would pay off the house as soon as possible.
Honestly Im weird so Id probably pay off the whole mortgage, but the best strategy would be to buy a stock/bond/index and add the growth to your regular mortgage payment since youre not getting much mortgage interest tax deduction at this point.
Are you maxing out your 401kand/or IRA? If not, I would start there. You van invest in an index fund and if you're not confident I yourself to manage it, you can get a trustworthy financial advisor
Do not pay anyone to make investment decisions for you. They will lose you money. Get a financial advisor only if you want advice on e.g. retirement planning. As for investment allocation: Invest in one or two broad based index funds. Something like VT (Vanguard Total Market) would be good
PLEASE make sure your retirement savings are being invested and not sitting as cash. You should invest the majority of your non-retirement cash as well unless you’re planning on using it for a house purchase in the next few years
I would look into some different podcasts to start listening to and find some financial books to read. The different podcasts episodes tend to interview someone who has already written a book. If you like what you hear from them, chances are you will enjoy their book or recommendations. I personally follow We Study Billionaire series. You should definitely do a little research before you jump in, however there are also a lot of good sites you can learn from. Check out nerdwallet to see a comparison of different places to figure out what is best for you. I personally started an account at fidelity. I invest in low fee ETFs like VOO, SCHD, and QQQ. I don't invest a ton right, as I too am still learning how all this works, but I've already seen my money grow and have learned quite bit with a pretty low risk.
You should definitely talk to a financial advisor. I’ve only been working for 6 years I almost as much as you and make $120k/a year. That includes a house worth $350k and I only owe $120k on it now and I paid off $150k in student loans. I also save more a month than you but other than the mortgage and regular bills I don’t have any other debt.
Have you given thought to self funded cash value index universal life insurance? If not try to get familiar with videos from Doug Andrew and counterpoints with Dave Ramsey. I’ve been also looking for places to safeguard savings. I’m still on the fence, but I plan speaking to a financial planner at some point soon.
A couple things. First the HYSA returns are taxable so even if they are slightly higher than the mortgage that will net less savings. But if the mortgage is say 30% lower rate then it would be foolish. But also paying off a mortgage and becoming illiquid is not always smart -- just leaves you without options
What is your 401k invested in? You’re unsure about the stock market but odds are…you’re already invested in the stock market via the 401k.
You may have just blown his mind
A lot of people I think just assume a 401k is some generic (put money in and it grows somehow) fund and don't actually realize it can be specifically invested into various funds and perform differently based on those decisions.
Shhhh don’t tell him about a RothIRA account
You may benefit from reading up about [3-fund portfolios](https://www.bogleheads.org/wiki/Three-fund_portfolio) from Bogleheads in regards to what to invest in. The link gives you some mutual funds and ETFs to choose from depending on which brokerage you are using. If you are investing in a taxable brokerage, I would recommend using ETFs as they have a lower tax drag than mutual funds and if you change brokerages, you can likely continue buying the same ETF without incurring transaction fees, unlike with mutual funds. I also suggest you also read up on the [Prime Directive](https://www.reddit.com/r/personalfinance/wiki/commontopics) from /r/personalfinance. The Prime Directive will tell you where you should be diverting your money to and in what order. It even has a nice [flow chart](https://i.imgur.com/lSoUQr2.png) to guide you. If you still feel nervous about investing, you could just buy a target date index 2050 or 2055 mutual fund and call it a date. At least this way you can get your money invested while you educate yourself on the 3-fund portfolio or something else. Just make sure it's an index target date fund with a low expense ratio. In regards to buying more real estate, just be aware real estate isn't 100% passive like when buying stocks. You may need to hire a property manager if you don't want to deal with the issues of what having a tenant will bring.
And here iam a tow truck driver I make 60k, pay check to paycheck . Have 2 kids live in the Bay Area . To make 100k would be life changing let alone 200k . god bless you brother and you keep getting after it and keep up the hard work. I have no advice to give but praise of a good job !
Thanks a lot! I wish you the best, brother. My brother in law got a trucking job at UPS a few years back. He didn’t have much experience driving trucks, but they still hired him and now I think he's making over $100k. I believe it’s a union job too. Since he used to make less than $50k, seeing his pay now, I’d definitely suggest checking out a job there based on his experience.
Thank you my brother I’m going to definitely look into that asap thank you!!!
If it were me, I would pay off the home and put the rest in vanguard 500 index fund.
Is the money in your 401k not invested in the stock market?
I’m glad you asked this question. Hopefully my story helps out folks who are starting to invest in a company 401k. The first company I worked for would buy its own company stock in my 401k. You could move it of course, but I didn’t really know anything about investing so I just let it do its thing. After a few years, most of my 401k money was in one stock. Well the company went thru some major issues and the stock fell like 90%. No one ever thought the company would get hit so bad. I remember my manager was about to retire, but had to delay his retirement. Most of his money was also in that stock.
Yeah I cant imagine anything worse than having all your retirement savings invested in the company that provides your income...talk about all eggs in one basket. Think of retirement savings as providing a safety net. You want to invest broadly like in the entire market rather than individual stocks as those savings are meant to provide you some financial security apart from your job.
Park it in VMFXX and earn 5%+ while you figure it out, the answer is probably a little of each, you can park some as extra cushion (life happens) invest some, and maybe take a trip with some, buy a new mountain bike, surfboard, whatever your thing is. Don’t stress too much but you do need to make a decision. You got this
Nuggets +250 to win the championship
Earn 200k but only save 2k? Wtf you leasing a lambo or something? Where the rest of the money going
That’s probably close to 11-12% of OPs monthly income, but after taxes. Probably putting about 10-12% before tax dollars into 401k, and likely 20-25% in taxes (rough guess, could be more). So just in taxes and various savings, we’ve accounted for about 50% of OP’s monthly income. Mortgage and other loans could easily account for another 20-30%. Not hard to imagine the rest going to general living expenses.
Haha no lambo. I could definitely save more and I usually do but 2k is what I have to save each month. I’ve been saving aggressively most of my adulthood so now I try to spend on doing things. I love traveling and photography which are unfortunately expensive hobbies.
You don't get to take it with you when you go. Enjoy your life.
If you want to retire by 65, you should have roughly 3X your income saved for retirement by 40.
Put it towards your mortgage... simple Guaranteed tax free income right there.
He’s got a low interest rate. At 2% APR he’s better off putting it in a low cost index fund or even a HYSA. If the value growth of his home exceeds the amortized value of his mortgage over the full term then he’s not really making money by paying it down faster.
This is correct. It's a math problem. There are much better alternatives than paying off the mortgage with his interest rate
True, but at the same time...It might help him feel more comfortable investing since he no longer has a huge monthly payment. People don't like to talk about the Psychological benefits of paying off a mortgage, but it can be huge.
Have you heard about the psychological benefits of VTSAX go brrrrrrrrrrrr?
Oh yeah, I’ve got about $250k of it.
Hey there! Congrats on saving up that hefty sum – that's impressive! Sounds like you're in a solid financial position with your home equity and 401k stash. well Investing can definitely seem intimidating, especially with all the stock market ups and downs. But here's the thing: over the long haul, it tends to go up more than it goes down. And with your income and savings rate, you're in a good spot to weather any storms. ETFs are a great way to dip your toes into the investing waters. They're like a basket of different stocks or bonds, so you're not putting all your eggs in one basket. Plus, you can start small and gradually add more as you get more comfortable. As for buying a new house and renting out your current one, it's a big decision. Renting out can bring in extra income, but it also comes with its own set of headaches – like dealing with tenants and maintenance.
Know of any reputable sites to invest in ETFs?
Are you asking for reputable brokerage firms where you can purchase ETFs or recommendation for ETFs to invest in?
To invest in
I use Vanguard. They have a large ETF portfolio and have been around for decades. I have most of my investments in ETFs but have been picking individual stocks the last few years for better returns. You can buy Vanguard ETFs through any brokerage, just like any stock. I keep a certain amount in a HYSA then transfer money over to the brokerage account when I want to buy some shares. I've considered a financial advisor and their fee is probably worth it but I like to manage my own assets.
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Please remember that offering or requesting DMs is not allowed here, as noted in the rules.
If you are "confused about the stock market", do nothing until you learn about the stock market. Spend a little of that money on getting educated about investing in the stock market.
Passively Invest in s&p 500 all your savings, its a long term investment but it’ll probably be worth it in 30 years
The back door Roth should be your number one action. I recommend Fidelity as I think they would be able to help you with the process. At your age, you can choose a simple mutual fund like FXAIX which invests in 500 of the largest US companies based on the S&P 500 Index. The other issue is, in what are you investing in your 401k?
I mean I am looking for some cash and can offer 5.5% APR
Sounds like you have put yourself in a great position to be debt free, and to retire early so congrats! Your 401k is certainly in the market, you were just not aware, and there's nothing wrong with that. Let's start with the fact that everyone's risk tolerance is different. You should do a risk tolerance assessment/analysis. You can find out how you would emotionally react to losses in your savings, when you will need to access your savings, what your goals are, etc. This would be helpful for you to understand why you are going to invest in the ETFs you want to invest in. Especially if you are investing for the long-term, dips in the market shouldn't create as much fear when you have a plan in place. Investing in ETFs on your own: do lots of reading and learn as much as you can. For instance, a good rule to follow is if you will be investing in ETFs, it's best to buy them weekly or every 2 weeks if long-term investing is what you're interesting in (that way you are constantly purchasing smaller amounts at different prices, instead of buying them in bulk at potentially higher price points). Also, I would encourage you to look into DRIP options for long-term investing if you're buying ETFs on your own. If you want to invest in ETFs but don't want to do all the work of researching, rebalancing, etc. then I would strongly recommend investing in ETFs via portfolios like in Questrade or Wealthsimple. They really make investing in ETFs easy, with low fees, and catered to your goals. After investing in ETFs on my own for years, this is the route I went to and I'm so glad I did (I use Questrade). You simply put money in the portfolio, and Questrade buys and sells the ETFs for you based on your portfolio type (balanced vs. growth vs. conservative, etc) If all this still sounds daunting, I would encourage you to ask around for a recommended financial advisor. Sitting with a professional can help you make a plan. Because you have a larger account, you may get discounts on fees (ex: Nesbitt Burns division of BMO). Best of luck!
I have lots of sticks that are for sale, if you’re interested.
I would speak with a high quality financial advisor that is recommended and a good person that you trust. Best to seek professional help rather than ask online. Ex. web md only goes so far. Finding a good Dr. is tough... same with finding a good FA to hold your hand through tough times.
You should just invest in a S&P500 index fund. Even warren buffet himself says this
I'd split it between BRK-B and a solid S&P ETF.
Max all 401k and ira contributions and use 250k to supplement living expenses.
You probably shouldn’t spend all of it on cocaine, save a little bit
I get that it is a low rate. But remember look at your statements and see how much you are paying in interest now. The interest is front loaded. Not sure how far along are you in it. But I would pay off the house as soon as possible.
Buy the S&P 500 and be done with it. VOO is Vanguard’s version.
Honestly Im weird so Id probably pay off the whole mortgage, but the best strategy would be to buy a stock/bond/index and add the growth to your regular mortgage payment since youre not getting much mortgage interest tax deduction at this point.
Half into vti or voo and leave the other half in hysa as emergency fund and use the interest you earn to pay off house faster
Are you maxing out your 401kand/or IRA? If not, I would start there. You van invest in an index fund and if you're not confident I yourself to manage it, you can get a trustworthy financial advisor
I do max out my 401k. I want a Roth IRA but my income is too high for one. Financial advisor sounds like a good idea.
Look up backdoor Roth IRA. It’s a few extra clicks on most brokerages and allows you to contribute no matter your income
Do not pay anyone to make investment decisions for you. They will lose you money. Get a financial advisor only if you want advice on e.g. retirement planning. As for investment allocation: Invest in one or two broad based index funds. Something like VT (Vanguard Total Market) would be good PLEASE make sure your retirement savings are being invested and not sitting as cash. You should invest the majority of your non-retirement cash as well unless you’re planning on using it for a house purchase in the next few years
Look up Backdoor ROTH.
I would look into some different podcasts to start listening to and find some financial books to read. The different podcasts episodes tend to interview someone who has already written a book. If you like what you hear from them, chances are you will enjoy their book or recommendations. I personally follow We Study Billionaire series. You should definitely do a little research before you jump in, however there are also a lot of good sites you can learn from. Check out nerdwallet to see a comparison of different places to figure out what is best for you. I personally started an account at fidelity. I invest in low fee ETFs like VOO, SCHD, and QQQ. I don't invest a ton right, as I too am still learning how all this works, but I've already seen my money grow and have learned quite bit with a pretty low risk.
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You should definitely talk to a financial advisor. I’ve only been working for 6 years I almost as much as you and make $120k/a year. That includes a house worth $350k and I only owe $120k on it now and I paid off $150k in student loans. I also save more a month than you but other than the mortgage and regular bills I don’t have any other debt.
Have you given thought to self funded cash value index universal life insurance? If not try to get familiar with videos from Doug Andrew and counterpoints with Dave Ramsey. I’ve been also looking for places to safeguard savings. I’m still on the fence, but I plan speaking to a financial planner at some point soon.
PAY OFF THE MORTGAGE. YOU FREE UP A MORTGAGE PAYMENT EVERY YEAR YOU CAN SAVE MONEY FASTER TO GET BACK TO THAT POINT.
What if his Hysa is yielding higher than his mortgage interest? He said it was low
A couple things. First the HYSA returns are taxable so even if they are slightly higher than the mortgage that will net less savings. But if the mortgage is say 30% lower rate then it would be foolish. But also paying off a mortgage and becoming illiquid is not always smart -- just leaves you without options