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#1
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I know you guys aren't financial advisors (at least most of you), but some general confirmation that my plan is a good one would be nice. Here's my situation:
I'm 25 and make about $60k a year, not counting any extra I make playing poker ($4500 last year after taxes). I'm buying a house that will be ready early July. The mortgage is roughly $170k, figure payments of $1350 a month. That's roughly 27% of my gross monthly income. It's a nice house on an excellent lot in a growing area. It should appreciate nicely and it's just a few minutes from where I work. I currently contribute 6% to a 401(k), and my employer contributes 3%. That will add up to about $5400 this year, not counting gains and interest. Aside from the 401(k), I have $1140 in a Vanguard rollover IRA. Currently all of the funds are in their STAR mutual fund, which is a mixture of several of their funds. It provides a little bit of diversification. My 401(k) money is currently all in the fixed income fund. I know you can't predict the market, but I'm waiting a few months to see how things look before splitting that money up into other funds. In addition to those accounts, I should be able to contribute another $500-$700 a month into investments. Most of that will go towards maxing a Vanguard Roth account that I will open later this year. I will put all of that money into a Target Retirement fund until there is enough to split up among individual funds. The remainder will go short-term savings through Emigrant Direct and an investment account through Scottrade that I'll use to purchase individual stocks. I think this is a good plan. Anyone see any flaws? |
#2
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Man you are so ahead of 99% of 25 yr olds it aint even funny. Nice on all of this. You got your 401K very aggro right? At your age I'd have no bonds or stable at all. I'd do all small company and international, but that's just me.
Indy |
#3
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No, as I said, currently there's only like $1400 in the 401k and it's all in the fixed-income fund. I'm waiting 4-6 months to have a better feel for what I think the market will do before I move that money somewhere. I know that market timing is really practically impossible, but there are lots of reasons to think we're near a peak right now.
Once I DO move it, most of it will go into a Large Cap Value fund run by Dodge & Cox that has a 5-star Morningstar rating. |
#4
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you can't time a peak. fixed income fund is for old people. stop being weak tight. the international exposure is a great deal right now.
Indy |
#5
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[ QUOTE ]
you can't time a peak. fixed income fund is for old people. stop being weak tight. the international exposure is a great deal right now. [/ QUOTE ] This is good advice. 40 years from now when you retire you won't remember how your portfolio performed over a few months in 2006. |
#6
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I'm willing to bet what is essentially a small amount of money that the market is much more likely to lose 10% over the next 6 months than it is to gain 10%. If I'm wrong, I'm out less than $200 and I'll consider it a lesson learned. [img]/images/graemlins/tongue.gif[/img] Once I have enough money to diversify well, it won't be an issue.
Thanks for your thoughts. |
#7
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[ QUOTE ]
I'm willing to bet what is essentially a small amount of money that the market is much more likely to lose 10% over the next 6 months than it is to gain 10%. If I'm wrong, I'm out less than $200 and I'll consider it a lesson learned. [img]/images/graemlins/tongue.gif[/img] Once I have enough money to diversify well, it won't be an issue. Thanks for your thoughts. [/ QUOTE ] The other posting are advising you to go internation and small companies, which to me aren't as closely tied to what the "market" is doing, which I assume means the US indexes. -SmileyEH |
#8
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[ QUOTE ]
I'm buying a house that will be ready early July. The mortgage is roughly $170k, figure payments of $1350 a month. [/ QUOTE ] ?? Did you think about taxes, insurance, and HOA? I just slide the decimal point over. 170k = 1700 per month on average. Don't forget about all the other [censored] that comes with a house like the 10k you will drop at Home Depot over the first year. Housing sucks... |
#9
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You're doing very well. My only comment is that having a mortgage payment that represents 27% of your gross income seems too high. Depending on how you filled out your W4, that 40%-50% of your take-home pay. You can probably get by on that, but should keep 3-4 mortgage payments in reserve in case times get hard.
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#10
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[ QUOTE ]
Did you think about taxes, insurance, and HOA [/ QUOTE ] Yep. The mortgage premium plus taxes, insurance, and HOA, will be less than $1400 a month. I've run the numbers myself and the mortgage lenders give me the same numbers too. [ QUOTE ] My only comment is that having a mortgage payment that represents 27% of your gross income seems too high. Depending on how you filled out your W4, that 40%-50% of your take-home pay. You can probably get by on that, but should keep 3-4 mortgage payments in reserve in case times get hard. [/ QUOTE ] It's 43% and I'm definitely going to create an emergency reserve. I should clear around $1000 a month on top of all of my bills (no car payment atm) at least. And I SHOULD get a pay increase come next March. I just went by the standard guidelines I found all over the place. They all agreed on keeping it under 30% of gross income. Thanks guys. |
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