JamesKim
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Hey everyone.
I just want to layout "part" of my overall investment layouts. I've been diligently saving, investing and spending since I started my first career job.
I'm currently on track to max out my employers 401k. Last year I had maxed out my ROTH IRA of $5,000. Hoping to max out this year. Currently about 16-17k in my stock account (short term). My savings, not so much but it's around $5,000.
My credit cards are all paid off. Just my student loan which is currently just under $10,000 and paying about $120 per month.
I'm 24 and (Don't laugh) live with my parents.
Is there anything I should doing additionally? Possibly accumulate more savings, but my expenses are low and I normally put funds into my stock account to appreciate my capital.
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Fri May 27, 2011 12:13 am |
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oldguy
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No, I wouldn't add to the $5000 savings account, that's enough 'dead' money as long as you have a sizable taxable account that is immediately avaialble as a backup EF.
IMO, you are doing it right -the 3 account types are taxable, posttax, and pretax, you are fundings all three. It seems that many young peple are forgetting the taxable account and focusing only on the retirement accounts - but people really need a pre-age 59 1/2 account that is unresticted - and available for houses, rental houses, small business, etc.
What are your accounts invested in? Ie, your 401k, your Roth, and your taxable? $17k in the the taxable, how much in the other two?
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Fri May 27, 2011 1:49 am |
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coaster
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Hey, who's laughing about living with your parents? I'm salivating at the thought of what your discretionary free cash flow must be. 
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Fri May 27, 2011 6:07 am |
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JamesKim
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Cash: $ 46.35
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Joined: 26 Sep 2007
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Oldguy:
My accounts are heavily invested in various types of assets. I had to wait a year to enroll in my company's 401k so this is my first year starting. Last year I started my ROTH and Taxable account. I've only been at my company for almost 2 years so I haven't really worked much.
For my 401K: mainly funds that are no load and low expense ratios. Mostly 4-5 star rated funds, One 3 star fund. Currently, I'm putting in $317.30 per week to max out annually. Currently at $7,000. My company's match is 3% and they have some kind of pension profit sharing which I'm not too familar with.
For my Roth: Various types. MLP, Index Funds, etc... A little over $5,000.
My trading account (Taxable): Big time aggressive and various assets. Last year I had profited a realized of 60%. Used margins from hell. $17,000 in this account. I normally trade/short term invest in this account.
I think my financial overview is pretty stabled and well structure. I just need to work on increasing my salary per annual basis. Sometimes I use some of the realized gains as discretionary spending, but very little of it.
My currently salary is close to $70k. I want to be able to save enough to buy a damn house, but I think prices will continue to stay low for quite some time, so I'm hoping to put a down payment in maybe 2-3 years. I'll be 26-27 by then.
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Fri May 27, 2011 12:23 pm |
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JamesKim
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Cash: $ 46.35
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I feel that I need to beef up my savings. I do not intend to touch any of my money in my 3 accounts. Eventually, I would like to put a down payment on a house so yea...
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Fri May 27, 2011 12:27 pm |
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littleroc02us
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If your 24 and you live with your parents, why do you still have debt? When you have payments you have less disposable income and eventually the more payments you get you won't have any at all.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Fri May 27, 2011 1:06 pm |
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oldguy
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quote:
so I'm hoping to put a down payment in maybe 2-3 years. I'll be 26-27 by then.
How old will you be in 2-3 years if you don't buy a house? 
I keep all but $5000 in a SP500 Index, it has returned about 11%/yr for over 35 yrs. Whenever we buy houses (more rentals) I borrow as close to 100% as I can (while still getting best rate) and retain the use of our own money in that 11% fund. Ie, I borrow for our shortterm needs rather than 'save' for them. It's my way of meeting shortterm needs with money that earns 11%. And the risk is removed by having the SP500 account as a fall-back, I don't worry about one of the houses going upsidedown, I have it covered elsewhere.
Good job on two retirement accounts, you are adding $23,600/yr and your out-of-pocket is about $17,500 - so you are getting a 35% return out-of-the-box even if the funds have a zero return that year.
But assuming 11%/yr, your $23.6k/yr will be $5.8M at age 55. So if you make your Plan the priority (auto deposit, never disrupt), you could enjoy spending every dime you earn and still be a MultiMil at a reasonably young age.
When I traded on margin, I used equity from the houses, if you borrow 6% 30-yr fixed rate capital (rather than an 8% margin account) your monthly cost is low, and you are free to wait for positions to right themselves, w/o having your decisions driven by margin calls, high rates, 50% limits, yada. Actually, I've done the best with plain old SP500 Index or SPY. Eg, if you put a $50k note on a house your payment is $300/m for 30 y ($108,000). Put the $50k cash in SP500 and wait 30 yrs = $1,150,000. If you do that 3 or 4 times in addition to the two retirement accounts, you can build a pretty nice fortune for your familly.
And you need not lower your standard of living to do it, just direct the investment portion of your income stream wisely. ('Debt-free' is not a goal, high net worth is a goal.)
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Fri May 27, 2011 3:42 pm |
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JamesKim
Senior Member
Cash: $ 46.35
Posts: 216
Joined: 26 Sep 2007
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I'm planning to reduce my debt to $0. Mainly my student loan, but I'm currently paying it by a monthly basis. If my realized gain is large enough to wipe out my student loan, then I'm going to pay it all off. Liabilities is liabilities to me.
I'm not too knowledgable with houses yet. My margins are usually for a couple of days. I tend to do quite well, but I'm very very cautious in where I apply it to. Usually it's a low beta stock.
I think for the time being, I'm going to continually distribute my money in my accounts and reduce my debt as much as possible.
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Fri May 27, 2011 4:37 pm |
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JamesKim
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Cash: $ 46.35
Posts: 216
Joined: 26 Sep 2007
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To Littlroc:
My only debt is my student loan and it's under the 10 yr payment plan. I don't want to use my own money to pay it off. I originally had 2 student loans and the other loan I paid off from my realized gains in stock. Other than that, I have no serious long-term debt. My goal is to use the profits from investments to pay off my loan and so far it's been working in my favor.
I only live with my parents because saving and investing would be a lot easier for me and I feel it's important to actively participate now rather than later to the fullest.
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Fri May 27, 2011 4:44 pm |
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littleroc02us
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[quote="JamesKim"]I'm planning to reduce my debt to $0. Mainly my student loan, but I'm currently paying it by a monthly basis. If my realized gain is large enough to wipe out my student loan, then I'm going to pay it all off. Liabilities is liabilities to me.
quote]
Liabilities never got anyone rich, assets do.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Fri May 27, 2011 7:28 pm |
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littleroc02us
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quote:
Originally posted by JamesKim
To Littlroc:
My only debt is my student loan and it's under the 10 yr payment plan. I don't want to use my own money to pay it off. I originally had 2 student loans and the other loan I paid off from my realized gains in stock. Other than that, I have no serious long-term debt. My goal is to use the profits from investments to pay off my loan and so far it's been working in my favor.
I only live with my parents because saving and investing would be a lot easier for me and I feel it's important to actively participate now rather than later to the fullest.
What happens when we go into another recession just like the last 2 years and your investments are now worth half, now you've lost your money to help pay off debt unless you wait for the gains to come back.... Your idea is very risky I must say.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Fri May 27, 2011 7:30 pm |
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JamesKim
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Cash: $ 46.35
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yes I agree, very risky. But I'm confident that I can achieve that by the end of this year. And that's another reason why I want to beef up my savings. To be prepared for a rainy day or months of years. Even though I'm contributing diligently into my accounts, I feel it's always safe to have a substantial savings.
I agree that liabilities never got anyone rich, but in my position with only 1 significant debt under my belt which isn't a lot; I figure it's better to try to pay it all off if I'm able to profit in this market.
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Fri May 27, 2011 10:10 pm |
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oldguy
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quote:
yes I agree, very risky. But I'm confident that I can achieve that by the end of this year. And that's another reason why I want to beef up my savings. To be prepared for a rainy day -
liabilities never got anyone rich
James - The terms "very very risky", "very risky", "too risky", "save for a rainy day", "eggs in one basket", and so on, are mostly emotions. I suggest applying the math, do the hard work of a statisical analysis, look up the standard deviations of your investments, do a probability of success calculation, perhaps a Monte Carlo Simulation (altho I usually skip it, others like to know the outcomes) - a risk evaluation coupled with a risk mitigation plan can be way more useful than trying to guess whether 'risky' is safer than 'very risky'.
Over my career of wealth-building, I found a good risk evaluation study to be way better than intuition. Or maybe I just have crummy intuition?
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Fri May 27, 2011 11:34 pm |
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JamesKim
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Cash: $ 46.35
Posts: 216
Joined: 26 Sep 2007
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I don't invest without doing computations and analysis, it's foolish not to do so, but here's so many formulas and theories to use and yet the unexpected can happen and all those analysis can go right down. That's when your savings or emergency funds come into play.
This economy and the crisis has effected me in a way I think, but liability is a liability to me. If I can get it to zero, I will because it's better than having no debt. As far as being risky, yes I will take on it depending its environment, my personal situation, etc... But I never let emotion get a part of me, I've learned it the hard way during the crisis. Thankfully I was just using $1,000 lol.
I appreciate the inputs.
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Sat May 28, 2011 12:37 am |
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coaster
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I think that perhaps a review of Jim's posting here would provide some useful and interesting background. I've learned this is no ordinary young man and if his methods and his reasons for applying those methods seem out of the ordinary, well, maybe there's the reason for it. Some of us just choose to follow a different path, because, well, because that's the path that seems to beckon.........
Jim, only you can know how to weight those inputs in grinding out your own solutions; if one or another of those inputs doesn't seem to contribute to the solution now, put it in your wisdom file, where maybe it can be found for some other problem at some time in the future. 
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Sat May 28, 2011 1:11 am |
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